Document:

exv10w1

Exhibit 10.1

Private & confidential

Dated: 2nd July, 2010

FBB-FIRST BUSINESS BANK S.A.

- and -

GRAND SPARTOUNTA INC.

 

 

LOAN AGREEMENT

relating to a term loan facility of up to US$24,150,000

 

 

Theo V. Sioufas & Co.

Law Offices

Piraeus

(J18-182268/C)

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	CLAUSE	 	HEADINGS	 	PAGE	 
	 
	1.	 	PURPOSE, DEFINITIONS AND INTERPRETATION
	 	 	1	 
	 
	2.	 	THE FACILITIES
	 	 	14	 
	 
	3.	 	INTEREST
	 	 	16	 
	 
	4.	 	REPAYMENT — PREPAYMENT
	 	 	19	 
	 
	5.	 	PAYMENTS, TAXES, ACCOUNTS AND COMPUTATION
	 	 	23	 
	 
	6.	 	REPRESENTATIONS AND WARRANTIES
	 	 	26	 
	 
	7.	 	CONDITIONS PRECEDENT
	 	 	31	 
	 
	8.	 	COVENANTS
	 	 	36	 
	 
	9.	 	EVENTS OF DEFAULT
	 	 	48	 
	 
	10.	 	INDEMNITIES — EXPENSES — FEES
	 	 	54	 
	 
	11.	 	SECURITY, APPLICATION, SET-OFF AND ACCOUNTS
	 	 	58	 
	 
	12.	 	UNLAWFULNESS, INCREASED COSTS
	 	 	62	 
	 
	13.	 	ASSIGNMENT, PARTICIPATION, LENDING BRANCH
	 	 	65	 
	 
	14.	 	MISCELLANEOUS
	 	 	67	 
	 
	15.	 	NOTICES AND OTHER MATTERS
	 	 	69	 
	 
	16.	 	APPLICABLE LAW AND JURISDICTION
	 	 	71	 
	 
	SCHEDULE	 	 	 	 
	 
	1.	 	FORM OF DRAWDOWN NOTICE
	 	 	 	 

 

 

THIS AGREEMENT is dated 2nd day July, 2010 made BETWEEN:

	1.	 	FBB-FIRST BUSINESS BANK S.A., a bank incorporated in the Republic of Greece with its head
office at 91 Michalakopoulou Street, 11528 Athens, Greece, acting except otherwise herein
provided, through its office at 62, Notara and Sotiros Dios streets, 185 35 Piraeus, Greece,
as lender (hereinafter called the “Bank”, which expression shall include its successors and
assigns); and
	 
	2.	 	GRAND SPARTOUNTA INC., a company organised and existing under the laws of the
Republic of The Marshall Islands and having its registered office at Trust Company Complex,
Ajeltake Island, Majuro, Marshall Islands MH 96960, as borrower (hereinafter called the
“Borrower”, which expression shall include its successors)

AND IT IS HEREBY AGREED as follows:

	1.	 	PURPOSE, DEFINITIONS AND INTERPRETATION

	1.1	 	Purpose: This Agreement sets out the terms and conditions upon and subject to which
the Bank agrees to make available to the Borrower a term loan of up to $24,150,000 (Dollars
twenty four million one hundred fifty thousand) by way of one (1) Advance for the purpose of
re-financing the existing loan Indebtedness of the Borrower to the Bank secured on the Vessel.

	1.2	 	Definitions: In this Agreement, unless the context otherwise requires each term or
expression defined in the recital of the parties, in this Clause and in Clause 11.1 shall have
the meaning given to it in the recital of the parties, in this Clause and:
	 
	 	 	“Accounts Pledge Agreement” means an agreement to be entered into between the Borrower and
the Bank for the creation of a pledge over the Earnings Account and the Retention Account in
favour of the Bank, in form and substance satisfactory to the Bank as the same may from time
to time be amended and/or supplemented;
	 
	 	 	“Advance” means each borrowing of a proportion of the Commitment by the Borrower or (as the
context may require) the principal amount of such borrowing outstanding at any relevant time
hereunder;
	 
	 	 	“Availability Period” means the period starting on the date hereof and ending on the
30th day of July, 2010 or until such later date as the Bank may agree in writing
or on such earlier date (if any), (i) on which the whole of the Commitment has been advanced
by the Bank to the Borrower, or (ii) on which the Commitment is fully

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	 	 	cancelled or reduced to zero pursuant to Clauses 9.8 or 12.1, 12.2 or any other Clause of
this Agreement;
	 
	 	 	“Bank” means the Bank as specified in Recital (1) of this Agreement and includes its
successors in title and transferees;
	 
	 	 	“Banking Day” means a day on which dealings in deposits in Dollars are carried on in the
London Interbank Market and (other than Saturday or Sunday) on which banks are open for
business in London, New York City, Piraeus and Athens (or any other relevant place of
payment under Clause 5);
	 
	 	 	“Borrowed Money” means Indebtedness in respect of (i) money borrowed or raised and debit
balances at banks, (ii) any bond, note, loan stock, debenture or similar debt instrument,
(iii) acceptance or documentary credit facilities, (iv) receivables sold or discounted
(otherwise than on a non-recourse basis), (v) deferred payments for assets or services
acquired, (vi) finance leases and hire purchase contracts, (vii) swaps, forward exchange
contracts, futures and other derivatives, (viii) any other transaction (including without
limitation forward sale or purchase agreements) having the commercial effect of a borrowing
or raising of money or of any of (ii) to (vii) above and (ix) guarantees in respect of
Indebtedness of any person falling within any of (i) to (viii) above;
	 
	 	 	“Borrower” means the Borrower as specified in the preamble of this Agreement;
	 
	 	 	“Charterparty Assignment” means in relation to the Vessel, the assignment of any Long
Charterparty, executed or (as the context may require) to be executed by the Owner in favor
of the Bank, in form and substance as the Bank may approve or require as the same may from
time to time be amended and/or supplemented (together the “Charterparties Assignments”);
	 
	 	 	“Charterparty Assignment Acknowledgement” means the acknowledgement of notice of the
assignment in respect of the relevant Long Charterparty to be given by the relevant
charterer, in the form scheduled to the relevant Charterparty Assignment (together the
“Charterparties Assignments Acknowledgements”);
	 
	 	 	“Classification” means *100 — A — 1.1 Navig II.; BC ESP with the Classification Society or,
in either case, such other classification as the Bank shall, at the request of the Borrower,
have agreed in writing to be treated as the Classification for the purposes of the Security
Documents;
	 
	 	 	“Classification Society” means, in respect of the Vessel, RINA, American Bureau of Shipping,
Lloyds Register of Shipping, Bureau Veritas, Det Norske Veritas, NKK or

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	 	 	such other classification society which is a member of IACS and which the Bank shall, at the
request of the Borrower, have agreed in writing to be treated as the Classification Society
for the purposes of the Security Documents;
	 
	 	 	“Compliance Certificate” means a certificate substantially in a form satisfactory to the
Bank signed by (i) the chief financial officer of the Group or, if the CFO is not available
a director of the Newlead Corporate Guarantor and (ii) a director of the Borrower;
	 
	 	 	“Corporate Guarantor” means the Grandunion Corporate Guarantor or, as the case may be, the
Newlead Corporate Guarantor and any other person nominated by the Borrower and acceptable to
the Bank which may give a Corporate Guarantee;
	 
	 	 	“Corporate Guarantee” means the Grandunion Corporate Guarantee or, as the case may be, the
Newlead Corporate Guarantee;
	 
	 	 	“Default” means any Event of Default or any event which with the giving of notice or lapse
of time (or any combination thereof) would constitute an Event of Default;
	 
	 	 	“Default Rate” means that rate of interest per annum which is determined in accordance with
the provisions of Clause 3.4;
	 
	 	 	“DOC” means a document of compliance issued to an Operator in accordance with rule 13 of the
ISM Code;
	 
	 	 	“Dollar” and “$” mean the lawful currency of the United States of America and in respect of
all payments to be made under any of the Security Documents means funds which are for same
day settlement in the New York Clearing House Interbank Payments System (or such other U.S.
dollar funds as may at the relevant time be customary for the settlement of international
banking transactions denominated in Dollars);
	 
	 	 	“Drawdown Date” means the day, being a Banking Day, on which the Loan is or, as the context
may require, shall be advanced to the Borrower;
	 
	 	 	“Drawdown Notice” means a notice substantially in the terms of Schedule 1;
	 
	 	 	“Drop-down Date” means the date on which of the total number of the issued and outstanding shares of the Borrower shall be transferred from the Grandunion Corporate Guarantor to the
Newlead Corporate Guarantor, such date not being later than fives days from the date of this
Agreement;

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	 	 	“Earnings” means all earnings of the Vessel, both present or future, including all freight,
hire and passage moneys, compensation payable to the Owner in the event of requisition of
the Vessel for hire, remuneration for salvage and towage services, demurrage and detention
moneys, contributions of any nature whatsoever in respect of general average, damages for
breach (or payments for variation or termination) of any charterparty or other contract for
the employment of the Vessel and any other earnings whatsoever due or to become due to the
Owner in respect of the Vessel and all sums recoverable under the Insurances in respect of
loss of Earnings and includes, if and whenever the Vessel is employed on terms whereby any
and all such moneys as aforesaid are pooled or shared with any other person, that proportion
of the net receipts of the relevant pooling or sharing agreement which is attributable to
the Vessel;
	 
	 	 	“Earnings Account” means the interest bearing account opened or, as the context may require
to be opened with the Bank at the Lending Branch in the name of the Borrower or such other
account with any other branch or any other bank, as may be required by and at the discretion
of the Bank, to which (inter alia) all Earnings of the Vessel owned by the Borrower are to
be paid in accordance with Clauses 11.5 and 8.5(b) and includes any sub-accounts thereof and
any other account designated in writing by the Bank to be the Earnings Account for the
purposes of this Agreement;
	 
	 	 	“Encumbrance” means any mortgage, charge (whether fixed or floating), pledge, lien,
hypothecation, assignment, security interest, title retention, arrest, seizure or other
encumbrance of any kind securing or any right conferring a priority of payment in respect of
any obligation of any person;
	 
	 	 	“Environmental Affiliate” means any agent or employee of the Borrower or any other Relevant
Party or any person having a contractual relationship with the Borrower or any other
Relevant Party in connection with any Relevant Ship or her operation or the carriage of
cargo thereon;
	 
	 	 	“Environmental Approval” means any consent, authorisation, licence or approval of any
governmental or public body or authorities or courts applicable to any Relevant Ship or her
operation or the carriage of cargo thereon and/or passengers therein and/or provisions of
goods and/or services on or from the Relevant Ship required under any Environmental Law;
	 
	 	 	“Environmental Laws” means all national, international and state laws, rules, regulations,
treaties and conventions applicable to any Relevant Ship pertaining to the pollution or
protection of human health or the environment including, without limitation, the carriage or
Materials of Environmental Concern and actual or

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	 	 	threatened emissions, spills, releases or discharges of Materials of Environmental Concern
and actual or threatened emissions, spills, releases or discharges of Materials of
Environmental Concern from any Relevant Ship;
	 
	 	 	“Environmental Claim” means (i) any claim by, or directive from, any applicable
governmental, judicial or other regulatory authority alleging breach of, or non- compliance
with, any Environmental Laws or Environmental Approvals or otherwise howsoever relating to
or arising out of an Environmental Incident or (ii) any claim by any other third party
howsoever relating to or arising out of an Environmental Incident (and, in each such case,
“claim” shall mean a claim for damages, clean-up costs, compliance, remedial action or
otherwise);
	 
	 	 	“Environmental Incident” means (i) any release of Material of Environmental Concern from the
Vessel, (ii) any incident in which Material of Environmental Concern is released from a
vessel other than the Vessel and which involves collision between the Vessel and such other
vessel or some other incident of navigation or operation, in either case, where the Vessel,
the Owner and/or the Manager of the Vessel are actually at fault or otherwise liable (in
whole or in part) or (iii) any incident in which Material of Environmental Concern is
released from a vessel other than the Vessel and where the Vessel is actually liable to be
arrested as a result and/or where the Owner and/or the Manager of the Vessel are actually at
fault or otherwise liable;
	 
	 	 	“Event of Default” means any events or circumstances set out in Clause 9.1 to 9.7 (incl.) or
described as such in any other of the Security Documents;
	 
	 	 	“Expenses” means the aggregate at any relevant time (to the extent that the same have not
been received or recovered by the Bank) of:

	 	(a)	 	all losses, liabilities, costs, charges, expenses, damages and outgoings of
whatever nature, (including, without limitation, Taxes, repair costs, registration fees
and insurance premiums, crew wages, repatriation expenses and seamen’s pension fund
dues) suffered, incurred, charged to or paid or committed to be paid by the Bank in
connection with the exercise of the powers referred to in or granted by any of the
Security Documents or otherwise payable by the Borrower in accordance with the terms of
any of the Security Documents;
	 
	 	(b)	 	the expenses referred to in Clause 10.2; and
	 
	 	(c)	 	interest on all such losses, liabilities, costs, charges, expenses, damages and
outgoings from, in the case of Expenses referred to in sub-paragraph (b)

5

 

	 	 	 	above, the date on which such Expenses were demanded by the Bank from the Borrower
and in all other cases, the date on which the same were suffered, incurred or paid
by the Bank until the date of receipt or recovery thereof (whether before or after
judgement) at the Default Rate (as conclusively certified by the Bank save in case
of manifest error);

“Final Maturity Date” means in relation to the Loan the date falling on the fifth
(5th) anniversary of the Drawdown Date;

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

“General Assignment” means first priority general assignment of all the Insurances and
Earnings and Requisition Compensation of the Vessel in form and substance satisfactory to
the Bank and respective notices of assignment;

“Governmental Withholdings” means withholdings and any restrictions or conditions resulting
in any charge whatsoever imposed, either now or hereafter, by any sovereign state or by any
political sub-division or taxing authority of any sovereign state;

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

“Grandunion” means Grandunion Inc., a company organised and existing under
the laws of the Republic of Marshall Islands and having its registered office at Trust
Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960;

“Grandunion Corporate Guarantee” means a guarantee given or, as the context may require, to
be given by the Grandunion Corporate Guarantor (which shall be replaced within five (5) days
from the date hereof by the Newlead Corporate Guarantee), in form and substance satisfactory
to the Bank as security for (inter alia) the Outstanding Indebtedness and any and all other
obligations of the Borrower under the Loan Agreement and the Security Documents;

“GAAP” means generally accepted accounting principles in the United States of America;

6

 

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

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

“Interest Payment Date” means in respect of the Loan or any part thereof in respect of which
a separate Interest Period is fixed the last day of the relevant Interest Period and in case
of any Interest Period longer than three (3) months the date(s) falling at successive three
(3) monthly intervals during such longer Interest Period and the last day of such Interest
Period;

“Interest Period” means in relation to the Loan or any part thereof, each period for the
calculation of interest in respect of the Loan or such part ascertained in accordance with
Clauses 3.2 and 3.3;

“ISM Code” means the International Safety 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 Safety of Life at Sea
Convention 1974 and includes any amendments or extensions thereto and any regulation issued
pursuant thereto;

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

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

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

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“LIBOR” means, for an Interest Period:

	 	(a)	 	the offered rate (if any) per annum for deposits in Dollars for such amount and
for such period which is the rate, for such period, appearing on the relevant page of
the Reuter BBA LIBOR01 at or about 11 a.m. London time on the Quotation Day (or, if the
Bank shall have made a determination pursuant to Clause 3.6 such later time (not being
later than 1 p.m. (London time) on the first day of such period) as the Bank may
determine) (and, for the purposes of this Agreement, “Reuter BBA LIBOR01” means the
display designated as “LIBOR01” on the Reuters Service or such other page as may
replace LIBOR01 on that service for the purpose of displaying rates comparable to that
rate or on such other service as may be nominated by the British Bankers’ Association
as the information vendor for the purpose of displaying the British Bankers’
Association Interest Settlement Rates for Dollars); and
	 
	 	(b)	 	if on such date no rate is quoted on Reuter BBA page LIBOR01, or if the rate
quoted on Reuter BBA page LIBOR01 does not reflect the Bank’s cost of funding, LIBOR
for such period shall be the rate per annum determined by the Bank to be the arithmetic
mean (rounded upwards, if necessary, to the nearest one-sixteenth of one per cent.) of
the rates per annum as the rate at which deposits in Dollars are offered to the Bank by
leading banks in the London Interbank Market at the Bank’s request at or about 11:00
a.m. (London time) on the second Banking Day before the first day of such period in an
amount approximately equal to the amount in relation to which LIBOR is to be determined
for a period equivalent to such period and for delivery on the first Banking Day of it;

“Loan” means the aggregate principal amount borrowed by the Borrower in respect of the
Commitment or (as the context may require) the principal amount thereof owing to the Bank
under this Agreement at any relevant time;

“Long Charterparty” means any time charter or contract of affreightment, agreement or
related document in respect of the employment of the Vessel whether now existing or
hereinafter entered into by the Borrower, as owner, and a charterer (of the approval of the
Bank) for a period of at least 12 months and with rates and terms of the Bank’s approval
(and shall include any addenda thereto);

“Management Agreement” means the operating agreement made or to be made between the
Borrower, as Owner of the Vessel and the Manager providing (inter alia) for the Manager to
manage the Vessel;

8

 

“Manager” means for the time being Newlead Bulkers S.A., a company duly
incorporated under the laws of the Republic of Liberia having its registered office at 80
Broad Street, Monrovia, Liberia and an office established in Greece (83 Akti Miaouli and
Flessa Street, GR 185.38 Piraeus) pursuant to the Greek laws 89/67, 378/68, 27/75 and 814/79
or any other person appointed by the Borrower, with the consent of the Bank, as the manager
of the Vessel and includes its successors in title;

“Manager’s Undertaking” means an undertaking executed or (as the context may require) to be
executed by the Manager in favour of the Bank, in form satisfactory to the Bank;

“Margin” means three point five zero per cent (3.50%) per annum; and

“Market Value” means the market value of the Vessel as determined in accordance with Clause
8.2(b);

“Material of Environmental Concern” 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;

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

“Mortgage” means the first priority ship mortgage and the Deed of Covenant collateral
thereto on the Vessel both to be executed by the Borrower in favour of the Bank in form and
substance satisfactory to the Bank;

“Newlead” means NewLead Holdings Ltd., a company duly incorporated under the laws
of Bermuda, whose registered office is at Canon’s Court, 22 Victoria Street, Hamilton,
Bermuda, and include its successors;

“Newlead Corporate Guarantee” means a guarantee given or, as the context may require, to be
given by the Newlead Corporate Guarantor (which shall replace within five (5) days from the
date hereof the Grandunion Corporate Guarantee), in form and substance satisfactory to the
Bank as security for (inter alia) the Outstanding

9

 

Indebtedness and any and all other obligations of the Borrower under the Loan Agreement and
the Security Documents;

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

“Outstanding Indebtedness” means the aggregate of (a) the Loan and interest accrued and
accruing thereon (b) the Expenses and (c) all other sums of money from time to time owing by
the Borrower to the Bank, including, without limitation, default interest, damages,
indemnities, costs, expenses, whether actually or contingently under this Agreement and the
other Security Documents;

“Operating Expenses” means the expenses for crewing, victualling, insuring, maintenance
(including dry-docking and special survey cost and expenses), spares, management, general
and administrative expenses and any other relevant expenses necessary for the commercial
operation of the Vessel which are reasonably incurred for a vessel of the size and type of
the Vessel;

“Owner” means the Borrower;

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

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

“Quotation Day” means, in respect of any period in respect of which LIBOR falls to be
determined under this Agreement, the second Banking Day before the first day of such period;

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

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

10

 

“Related Company” means any company member of the Group or other entity of which such
company is a Subsidiary and any Subsidiary of any such company or entity;

“Relevant Party” means the Borrower, the Borrower’s Related Companies, any other Security
Party and any Security Party’s Related Companies;

“Relevant Ship” means the Vessel 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” in respect of the Loan means each of the dates specified in Clause 4.1(a)
on which the Repayment Instalments shall be payable by the Borrower to the Bank;

“Repayment Instalment” means each instalment of the Loan, which becomes due for repayment by
the Borrower to the Bank on a Repayment Date pursuant to Clause 4.1(a);

“Requisition Compensation” means all sums of money or other compensation from time to time
payable by reason of requisition of the Vessel otherwise than by requisition for hire;

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

“Security Documents” means the documents referred to in Clause 11.1 and (where the context
so permits) this Agreement and (b) any and every other document as may have been or shall
from time to time after the date of this Agreement executed to guarantee and/or to secure
the whole or any part of the Outstanding Indebtedness and/or any and all other obligations
of the Borrower to the Bank pursuant to this Agreement (whether or not any such document
also secures moneys from time to time owing pursuant to any other document or agreement);

“Security Party” means the Borrower, the Corporate Guarantors and any other person (other
than the Bank) which is or may become a party to any of the Security Documents;

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

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

	 	(a)	 	at any relevant time during the period from 1st January, 2012 to
31st December, 2012 one hundred percent (100%) of the Loan;
	 
	 	(a)	 	at any relevant time thereafter one hundred and twenty percent (120%) of the
Loan;

Provided that during the period from the Drawdown Date to 31st December,
2011 the Security Requirement is hereby waived;

“Security Value” means the amount in Dollars (as certified by the Bank whose certificate
shall, in the absence of manifest error, be conclusive and binding on the Borrower) which,
at any relevant time is the aggregate of (a) the Market Value of the Vessel as most recently
determined in accordance with Clause 8.2(b), (b) the market value of any additional security
provided to the Bank pursuant to Clause 8.2(a) (if any);

“SMC” means a safety management certificate issued in respect of the Vessel 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 ownership of more than fifty
percent (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;

“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 (except
taxes concerning the Bank and imposed on the overall net income of the Bank) and “Taxation”
shall be construed accordingly;

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

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“Total Loss” means (a) actual, constructive, compromised or arranged total loss of the
Vessel; or (b) requisition for title or other compulsory acquisition of the Vessel otherwise
than by requisition for hire; or (c) hijacking, theft, condemnation, capture, seizure,
detention, arrest or confiscation of the Vessel by any government or by any person acting or
purporting to act on behalf of any government, unless the Vessel is released and restored to
the Borrower within thirty (30) days after the occurrence thereof; and

“Vessel” means the bulk carrier “GRAND SPARTOUNTA”, built Italy by Fincantieri Margnera in
1989, presently lawfully registered under the laws and flag of the Republic of Liberia in
the ownership of the Borrower, and propelled by one oil internal combustion engine of 17,800
HP together with all her boats, engines, machinery tackle outfit spare gear fuel consumable
and other stores belongings and appurtenances whether on board or ashore and whether now
owned or hereafter acquired and all the additions, improvements and replacements in or on
the above described vessel.

	1.3	 	Interpretation: In this Agreement:

	 	(a)	 	clause headings and the table of contents are inserted for convenience of
reference only and shall be ignored in the interpretation of this Agreement;
	 
	 	(b)	 	subject to any specific provision of this Agreement or of any assignment and/or
participation or syndication agreement of any nature whatsoever, reference to each of
the parties hereto and to the other Security Documents shall be deemed to be reference
to and/or to include, as appropriate, their respective successors and permitted
assigns;
	 
	 	(c)	 	reference to a person shall be construed as including reference to an
individual, firm, company, corporation, unincorporated body of persons or any State or
any agency thereof;
	 
	 	(d)	 	where the context so admits, words in the singular include the plural and vice
versa;
	 
	 	(e)	 	the words “including” and “in particular” shall not be construed as limiting
the generality of any foregoing words;
	 
	 	(f)	 	references to (or to any specified provisions of) this Agreement and all
documents referred to in this Agreement shall be construed as references to this
Agreement, that provision or that document as are in force for the time being and as
are amended and/or supplemented from time to time;

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	 	(g)	 	reference to this Agreement includes all the terms of this Agreement and any
Schedules, Annexes or Appendices to this Agreement, which form an integral part of
same;
	 
	 	(h)	 	reference to Clauses, Sub-Clauses and Schedules are to Clauses, Sub-Clauses and
Schedules in this Agreement;
	 
	 	(i)	 	reference to the opinion of the Bank or a determination or acceptance by the
Bank or to documents, acts, or persons acceptable or satisfactory to the Bank or the
like shall be construed as reference to opinion, determination, acceptance or
satisfaction of the Bank at the sole discretion of the Bank and such opinion,
determination, acceptance or satisfaction of the Bank shall be binding on the Borrower
(save for manifest error and as provided otherwise herein);
	 
	 	(j)	 	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;
	 
	 	(k)	 	references to any person include such person’s assignees and successors in
title;
	 
	 	(l)	 	reference 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
	 
	 	(m)	 	references to any enactment shall be deemed to include references to such
enactment as re-enacted, amended or extended.

	2.	 	THE FACILITIES 
	 
	2.1	 	The Loan

	 	(a)	 	Commitment to Lend: The Bank, relying upon (inter alia) each of the
representations and warranties set forth in Clause 6 and in each of the other Security
Documents, agrees to lend to the Borrower, upon and subject to the terms of this
Agreement, a term loan in the principal sum of up to $24,150,000 (Twenty million
Dollars).

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	 	(b)	 	Number and Purpose of Advances Agreed: The Commitment shall be
advanced to the Borrower in one (1) Advance and shall be used for the purpose set forth
in Clause 1.1.
	 
	 	(c)	 	Termination of the Commitment: Any part of the Commitment undrawn and
uncancelled at the end of the relevant Availability Period shall thereupon be
automatically cancelled.

	2.2	 	Drawdown Notice and commitment to Borrow: Subject to the terms and conditions of
this Agreement, the Commitment shall be made to the Borrower following receipt by the Bank
from the Borrower of a Drawdown Notice not later than 10 a.m. (London time) on the second
Banking Day before the date on which such drawdown is intended to be made. A Drawdown Notice
shall be effective on actual receipt thereof by the Bank and, once given, shall, subject as
provided in Clause 3.6, be irrevocable.
	 
	2.3	 	Disbursement of the Loan: Upon receipt of a Drawdown Notice complying with the terms
of this Agreement the Bank shall, subject to the provisions of Clause 7, on the date specified
in such Drawdown Notice, make the Commitment available to the Borrower.
	 
	2.4	 	Application of Proceeds: The Borrower undertakes with the Bank to use the Loan only
for the purposes stated in Clause 1.1 provided that, without prejudice to the
Borrower’s obligations under Clause 8.1(e), the Bank shall have no responsibility for the
application of the proceeds thereof by the Borrower, and the Bank shall not be under any
obligation to monitor the Borrower’s compliance with this undertaking and no breach of this
undertaking shall affect the Borrower’s other obligations hereunder.
	 
	2.5	 	Evidence: It is hereby expressly agreed and admitted by the Borrower that (save in
case of manifest error) abstracts or photocopies of the books of the Bank as well as
statements of accounts or a certificate signed by an authorised officer of the Bank shall be
conclusive binding and full evidence on the Borrower as to the existence and/or the amount of
the at any time Outstanding Indebtedness, of any amount due under this Agreement, of the
applicable interest rate or Default Rate or any other rate provided for or referred to in this
Agreement, the Interest Period, the value of additional securities under Clause 8.2(a), the
payment or non payment of any amount. Nevertheless, enforcement procedures or any other Court
or out-of-court procedure can be commenced by the Bank on the basis of the above mentioned
means of evidence including written statements or certificates of the Bank.

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	3.	 	INTEREST
	 
	3.1	 	Normal Interest Rate: The Borrower shall pay interest on the Loan (or as the case
may be, each portion thereof to which a different Interest Period relates) in respect of each
Interest Period related thereto on each Interest Payment Date. The interest rate for the
calculation of interest shall be the rate per annum determined by the Bank to be the aggregate
of (i) the Margin and (ii) LIBOR for that Interest Period.
	 
	3.2	 	Selection of Interest Period: The Borrower may by notice received by the Bank not
later than 10 a.m. (London time) on the second Banking Day before the beginning of each
Interest Period specify (subject to Clause 3.3 below) whether such Interest Period shall have
a duration of one (1) or two (2) or three (3) or six (6) or nine (9) or twelve (12) months
(subject to market availability) (or such other period as may be requested by the Borrower and
as the Bank, in its sole discretion, may agree to).
	 
	3.3	 	Duration of Interest Period: Every Interest Period shall, subject to market
availability to be conclusively determined by the Bank, be of the duration specified by the
Borrower pursuant to Clause 3.2 but so that:

	 	(a)	 	the initial Interest Period in respect of the Loan will commence on the date on
which the Loan is advanced and each subsequent Interest Period will commence forthwith
upon the expiry of the previous Interest Period;
	 
	 	(b)	 	if any Interest Period would otherwise overrun one or more Repayment Dates,
then, in the case of the last Repayment Date, such Interest Period shall end on such
Repayment Date, and in the case of any other Repayment Date or Dates the Loan shall be
divided into parts so that there is one part equal to the amount of the Repayment
Instalment due on each Repayment Date, falling during that Interest Period and having
an Interest Period ending on the relevant Repayment Date and another part equal to the
amount of the balance of the Loan having an Interest Period determined in accordance
with Clause 3.2 and the other provisions of this Clause 3.3 and the expression
“Interest Period in respect of the Loan” when used in this Agreement refers to the
Interest Period in respect of the balance of the Loan;
	 
	 	(c)	 	if the Borrower fails to specify the duration of an Interest Period in
accordance with the provisions of Clause 3.2 and this Clause 3.3, such Interest Period
shall have a duration of three (3) months unless another period shall be agreed between
the Bank and the Borrower provided, always, that such period (whether of three
(3) months or of different duration) shall comply with this Clause 3.3; and

16

 

	 	(d)	 	if the Bank determines that funds for the duration of an Interest Period
specified by the Borrower in accordance with Clause 3.2 are not readily available, then
that Interest Period shall have such duration as the Bank, in consultation with the
Borrower, may determine;
	 
	 	 	 	provided always that:

	 	(i)	 	any Interest Period which commences on the last day of a
calendar month, and any Interest Period which commences on the day on which
there is no numerically corresponding day in the calendar month during which
such Interest Period is due to end, shall end on the last Banking Day of the
calendar month during which such Interest Period is due to end; and
	 
	 	(ii)	 	if the last day of an Interest Period is not a Banking Day the
Interest Period shall be extended until the next following Banking Day unless
such next following Banking Day falls in the next calendar month in which case
such Interest Period shall be shortened to expire on the preceding Banking Day.

	3.4	 	Default Interest: If the Borrower fails to pay any sum (including, without
limitation, any sum payable pursuant to this Clause 3.4) on its due date for payment under any
of the Security Documents, the Borrower shall pay interest on such sum from the due date up to
the date of actual payment (as well after as before judgement) at the rate determined by the
Bank pursuant to this Clause 3.4. The period beginning on such due date and ending on such
date of payment shall be divided into successive periods of not more than 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 (i) two
per cent (2%) per annum, (ii) the Margin and (iii) costs of funds to the Bank, as conclusively
determined by the Bank save for manifest error. Such interest shall be due and payable on the
last day of each such period as determined by the Bank and each such day shall, for the
purposes of this Agreement, be treated as an Interest Payment Date. In case that a payment is
made in default for any amount, the Interest Periods will be determined by the Bank at its
discretion including the amounts for which there is no default, even if the Bank has not (yet)
exercised its rights pursuant to Clause 9.8(b) of the Agreement. Interest payable by the
Borrower as aforesaid shall be compounded semi-annually (or if the period fixed by the Bank is
longer, at the end of such longer period) and shall be payable on demand.

17

 

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

	 	(a)	 	Market Disruption Event: If and whenever, at any time prior to the
commencement of any Interest Period, the Bank (in its reasonable discretion) shall have
determined (which determination shall be conclusive) that a Market Disruption Event has
occurred in relation to the Loan for any such Interest Period, then the Bank shall
forthwith give notice thereof (a “Determination Notice”) to the Borrower and the rate
of interest on the Loan (or the relevant part thereof) for that Interest Period shall
be the percentage rate per annum which is the sum of:

	 	(i)	 	the Margin; and
	 
	 	(ii)	 	the rate which expresses as a percentage rate per annum the
cost to the Bank of funding the Loan (or the relevant part thereof) from
whatever source it may reasonably select.

	 	(b)	 	Meaning of “Market Disruption Event”: In this Agreement “Market
Disruption Event” means:

	 	(i)	 	at or about noon on the Quotation Day for the relevant Interest
Period Interbank Rate is not available; and/or
	 
	 	(ii)	 	before close of business in London on the Quotation Day for the
relevant Interest Period, the Bank determines (in its sole discretion) that the
cost to it of obtaining matching deposits in the London Interbank Market to
fund the Loan (or the relevant part thereof) for such Interest Period would be
in excess of the Interbank Rate; and
	 
	 	(iii)	 	before close of business in London on the Quotation Day for
the relevant Interest Period, 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 the relevant part thereof) for such Interest
Period.

18

 

	 	(c)	 	Alternative basis of interest or funding:

	 	(i)	 	If a Market Disruption Event occurs and the Bank or the
Borrower so requires, the Bank and the Borrower shall enter into negotiations
(for a period of not more than five (5) days (the “Negotiation Period”)) after
the giving of the relevant Determination Notice with a view to agreeing a
substitute basis for determining the rate of interest.
	 
	 	(ii)	 	Any alternative basis agreed pursuant to paragraph (i) above
shall be binding on the Bank and all Security Parties.

	 	(d)	 	Alternative basis of interest in absence of agreement: If the Bank and
the Borrower will not enter into negotiations as provided in clause 3.6(c)(i) or if an
alternative interest rate or alternative basis is not agreed within the Negotiation
Period, and the relevant circumstances are continuing at the end of the Negotiation
Period, then the Bank shall set the following Interest Period and an interest rate
representing the cost of funding of the Bank in Dollars of the Loan (or the relevant
part thereof) plus the Margin for such Interest Period; if the relevant circumstances
are continuing at the end of the Interest Period so set by the Bank, the Bank shall
continue to set the following Interest Period and an interest rate representing its
cost of funding in Dollars of the Loan (or the relevant part thereof) plus the Margin
for such Interest Period.
	 
	 	(e)	 	Notice of prepayment: If the Borrower does not agree with an interest
rate set by the Bank under Clause 3.6(d), the Borrower may give the Bank not less than
5 Banking Days’ notice of its intention to prepay the Loan at the end of the interest
period set by the Bank.
	 
	 	(f)	 	Prepayment; termination of Commitment: A notice under Clause 3.6(e)
shall be irrevocable; and on the last Banking Day of the interest period set by the
Bank, the Borrower shall prepay (without premium or penalty) the Loan, together with
accrued interest thereon at the applicable rate plus the Margin and the balance of the
Outstanding Indebtedness.
	 
	 	(g)	 	Application of prepayment: The provisions of Clause 4 shall apply in
relation to the prepayment made hereunder.

	4.	 	REPAYMENT — PREPAYMENT
	 
	4.1	 	(a) Repayment of the Loan: The Borrower shall and it is expressly undertaken by the
Borrower to repay the Loan by (a) twenty (20) equal consecutive

19

 

	 	 	quarterly Repayment Instalments to be repaid on each of the Repayment Dates so that
the first be repaid on the date falling three (3) months after the Drawdown Date of
the Loan and each of the subsequent ones consecutively falling due for payment on
each of the dates falling three (3) months after the immediately preceding Repayment
Date with the last (the 20th) of such Repayment Instalments falling due
for payment on the Final Maturity Date; subject to the provisions of this Agreement
each of the Repayment Instalments shall be in the amount of Eight hundred thousand
Dollars ($800,000) and (b) an additional payment of Dollars $8,150,000 (Eight
million one hundred fifty thousand Dollars) payable together with the last (the
20th) Repayment Instalment on the Final Maturity Date (the “Balloon
Instalment”);
	 
	 	 	provided that (i) in relation to the Loan, if the last Repayment Date would
otherwise fall after the Final Maturity Date, such last Repayment Date shall be the
Final Maturity Date, (ii) in the event that the Commitment is not drawn down in
full, the amount of the Repayment Instalments relative to the Loan and the Balloon
Instalment shall be reduced pro-rata by the amount of the part of the Commitment not
drawn (iii) there shall be no Repayment Dates relative to the Loan after the Final
Maturity Date (iv) on the Final Maturity Date the Borrower shall also pay to the
Bank any and all other monies then and payable under this Agreement and the other
Security Documents and (v) if any of the Repayment Instalments shall become due on a
day which is not a Banking Day, the due date therefore shall be extended to the next
succeeding Banking Day unless such Banking Day falls in the next calendar month, in
which event such due date shall be the immediately preceding Banking Day.
	 
	4.2	 	Voluntary Prepayment. The Borrower shall have the right, upon giving the Bank not less than
five (5) Banking Days’ notice in writing, to prepay, without penalty or prepayment fee, part
or all of the Loan, in each case together with all unpaid interest accrued thereon and all
other sums of money whatsoever due and owing from the Borrower to the Bank hereunder or
pursuant to the other Security Documents and all interest accrued thereon, provided,
that:

	 	(a)	 	the giving of such notice by the Borrower will irrevocably commit the Borrower
to prepay such amount as stated in such notice;
	 
	 	(b)	 	such prepayment may take place only on the last day of an Interest Period in
respect of the Loan provided, however, that if the Borrower shall request
consent to make such prepayment on another day and the Bank shall accede to such
request (it being in the sole discretion of the Bank to decide whether

20

 

	 	 	 	or not to do so) the Borrower will pay in addition to the amount to be prepaid, any
such sum as may be payable to the Bank pursuant to Clause 10.1;
	 
	 	(c)	 	each such prepayment shall be in an amount of a Repayment Instalment or a whole
multiple thereof or the balance of the Loan and will be applied by the Bank in or
towards prepayment first of the Balloon Instalment and then of the remaining Repayment
Instalments in the inverse order of their maturity;
	 
	 	(d)	 	every notice of prepayment shall be effective only on actual receipt (including
by fax) by the Bank, shall be irrevocable and shall oblige the Borrower to make such
prepayment on the date specified;
	 
	 	(e)	 	no amount prepaid may be re-borrowed; and
	 
	 	(f)	 	the Borrower may not prepay the Loan or any part thereof save as expressly
provided in this Agreement.

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

	 	(a)	 	On the Vessel becoming a Total Loss:

	 	(i)	 	prior to the advancing of the Commitment, the obligation of the
Bank to advance the Commitment shall immediately cease and the Commitment shall
be reduced to zero; or
	 
	 	(ii)	 	in case the Commitment has been already advanced, the Borrower
shall prepay the Outstanding Indebtedness the latest on the date falling one
hundred and eighty (180) days after that on which the Total Loss occurred or,
if earlier, on the date upon which the insurance proceeds in respect of such
Total Loss are or Requisition Compensation is received by the Borrower (or the
Bank pursuant to the Security Documents).
	 
	 	For the purpose of this Agreement:
	 
	 	(aa)	 	an actual total loss of the Vessel shall be deemed to have
occurred at the actual date and time the Vessel was lost but in the event of
the date of the loss being unknown then the actual total loss shall be deemed
to have occurred on the date on which the Vessel was last reported;

21

 

	 	(bb)	 	a constructive total loss shall be deemed to have occurred at
the date and time notice of abandonment of the Vessel is given to the insurers
of the Vessel for the time being (provided a claim for total loss is admitted
by such insurers) or, if such insurers do not admit such a claim, at the date
and time at which a total loss is subsequently adjudged by a competent court of
law or arbitration tribunal to have occurred;
	 
	 	(cc)	 	a compromised or arranged total loss shall be deemed to have
occurred on the date on which a binding agreement as to such compromised or
arranged total loss has been entered into by the insurers of the Vessel;
	 
	 	(dd)	 	Compulsory Acquisition of the Vessel shall be deemed to have
occurred on the date upon which the relevant requisition for title or other
compulsory acquisition occurs; and
	 
	 	(ee)	 	hijacking, theft, condemnation, capture, seizure, detention,
arrest, or confiscation of the Vessel by any government or by any person acting
or purporting to act on behalf of any government, which deprives the Borrower
of the use of the Vessel for more than sixty (60) days shall be deemed to occur
upon the expiry of the period of sixty (60) days after the date upon which the
relevant hijacking, theft, condemnation, capture, seizure, detention, arrest or
confiscation occurred.

	 	(b)	 	In case of sale or other disposal of the Vessel, immediately upon completion of
such sale or other disposal, the Borrower shall prepay the Outstanding Indebtedness.

	4.4	 	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 (calculated,
in the case of a prepayment pursuant to Clause 3.6 at a rate equal to the aggregate of the
Margin and the cost to the Bank of funding the Loan), (b) any additional amount payable
under Clause 5.3 and (c) all other sums payable by the Borrower to the Bank under this
Agreement or any of the other Security Documents including, without limitation, any amounts
payable under Clause 10.

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	5.	 	PAYMENTS, TAXES, ACCOUNTS AND COMPUTATION
	 
	5.1	 	Payments — No set-off or Counterclaims

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

	 	(i)	 	in Dollars, not later than 10.00 a.m. (London time) on the
Banking Day (in Athens, London and New York City) on which the relevant payment
is due under the terms of this Agreement; and
	 
	 	(ii)	 	to the Receiving Bank for the account of the Bank, Account No.
04416740, SWIFT Code: FFBGGRAA, reference: Grand Spartounta Inc.—
Loan Agreement”, provided, however, that the Bank shall have
the right to change the place of account for payment, upon fifteen (15) Banking
Days’ prior written notice to the Borrower.

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

	5.2	 	Payments on Banking Days: All payments due shall be made on a Banking Day. If the
due date for payment falls on a day which is not a Banking Day, the due payment or payments
shall be made on the next following Banking Day unless such Banking Day falls in the next
calendar month in which case payment shall be made on the immediately preceding Banking Day.
	 
	5.3	 	Gross Up: If at any time any law, regulation, regulatory requirement or requirement
of any governmental authority, monetary agency, central bank or the like compels the Borrower
to make payment subject to Governmental Withholdings, or any other deduction or withholding,
(excluding tax withholdings on the Bank’s overall net

23

 

	 	 	income) the Borrower shall pay to the Bank such additional amounts as may be necessary to
ensure that there will be received by the Bank a net amount equal to the full amount which
would have been received had payment not been made subject to such Governmental Withholdings
or other deduction or withholding. The Borrower shall indemnify the Bank against any losses
or costs incurred by the Bank by reason of any failure of the Borrower to make any such
deduction or withholding or by reason of any increased payment not being made on the due
date for such payment. The Borrower shall, not later than thirty (30) days after each
deduction, withholding or payment of any Governmental Withholdings, forward to the Bank
official receipts and any other documentary receipts and any other documentary evidence
reasonably required by the Bank in respect of the payment made or to be made of any
deduction or withholding or Governmental Withholding. The obligations of the Borrower under
this provision shall, subject to applicable law, remain in force notwithstanding the
repayment of the Loan and the payment of all interest due thereon pursuant to the provisions
of this Agreement.
	 
	5.4	 	Mitigation: If circumstances arise which would result in an increased amount being
payable by the Borrower under this Clause then, without in any way limiting the rights of the
Bank under this Clause, the Bank shall use reasonable endeavours to transfer its obligations,
liabilities and rights under this Loan and the Security Documents to another office or
financial institution not affected by the circumstances, but the Bank shall not take any such
action if in its opinion, to do so would or might:

	 	(a)	 	have an adverse effect on its business, operations or financial condition; or
	 
	 	(b)	 	involve it in any activity which is unlawful or prohibited or any activity that
is contrary to, or inconsistent, with any regulation; or
	 
	 	(c)	 	involve it in any expense (unless indemnified to its reasonable satisfaction)
or tax disadvantage.

	5.5	 	Tax credits: If the Bank receives for its own account a repayment or credit in
respect of tax on account for which the Borrower has made an increased payment under this
Clause, it shall pay to the Borrower a sum equal to the repayment or credit received,
provided, always, that:

	 	(a)	 	the Bank shall not be obliged to allocate this transaction any part of a tax
repayment or credit which is referable to a number of transactions;
	 
	 	(b)	 	nothing in this Clause shall oblige the Bank to arrange its tax affairs in any
particular manner, to claim any type of relief, credit, allowance or deduction

24

 

	 	 	 	instead of, or in priority to, another or to make any such claim within any
particular time;
	 
	 	(c)	 	nothing in this Clause shall oblige the Bank to make a payment which exceed any
repayment or credit in respect of tax on account of which the Borrower has made an
increased payment under this Clause; and
	 
	 	(d)	 	any allocation or determination made by the Bank under or in connection with
this Clause shall be binding on the Borrower.

	5.6	 	Loan Account: All sums advanced by the Bank to the Borrower under this Agreement and
all interest accrued thereon and all other amounts due under this Agreement from time to time
and all repayments and/or payments thereof shall be debited and credited respectively to a
separate memorandum account maintained by the Bank in accordance with its usual practices in
the name of the Borrower. The Bank may, however, in accordance with its usual practices or
for its accounting needs, maintain more than one account, consolidate or separate them but all
such accounts shall be considered parts of one single memorandum account maintained under this
Agreement. In case that a ship mortgage in the form of Account Current is granted as security
under this Agreement, the account(s) referred to in this Clause shall be the Account Current
referred to in the mortgage.
	 
	5.7	 	Certificates Conclusive: It is hereby expressly agreed and admitted by the Borrower
that abstracts or photocopies or other reproductions of the books of the Bank as well as
statements of accounts or a certificate signed by an authorised officer of the Bank shall
(save for manifest error) be conclusive, binding and full evidence on the Borrower as to the
existence and/or the amount of the at any time Outstanding Indebtedness, of any amount due
under this Agreement, of the applicable Interest Rate or Default Rate or any other rate
provided for or referred to in this Agreement, the Interest Period, the value of additional
securities under Clause 8.2(a) and the payment or non payment of any amount.
	 
	5.8	 	Computation: All interest and other payments payable by reference to a rate per
annum under this Agreement shall accrue from day to day and be calculated on the basis of
actual days elapsed and a 360 day year.

25

 

	6.	 	REPRESENTATIONS AND WARRANTIES
	 
	6.1	 	Continuing representations and warranties. The Borrower hereby represents and warrants to the
Bank that:

	 	(a)	 	Due Incorporation/Valid Existence: the Borrower and each of the other
Security Parties is duly incorporated and validly existing and in good standing under
the laws of their respective countries of incorporation and have power to own their
respective property and assets, to carry on their respective business as the same are
now being lawfully conducted and to purchase, own, finance and operate vessels, as well
as to undertake the obligations which they have undertaken or shall undertake pursuant
to the Security Documents to which it is a party;
	 
	 	(b)	 	Due Corporate Authority: the Borrower has power to execute, deliver
and perform its obligations under the Security Documents to which it is 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
authorize the execution, delivery and performance of the same and no limitation on the
powers of the Borrower to borrow will be exceeded as a result of borrowing the Loan;
	 
	 	(c)	 	Litigation: no litigation, arbitration, tax claim or administrative
proceeding involving a potential liability of the Borrower or any other Security Party
in excess of $500,000 is current or pending or (to its or its officers’ knowledge)
threatened against the Borrower or any other Security Party, which, if adversely
determined, would have a materially adverse effect on the business assets or the
financial condition of any of them;
	 
	 	(d)	 	No conflict with other obligations: the execution and delivery of, the
performance of their respective obligations under, and compliance with the provisions
of, the Security Documents by the relevant Security Parties will not (i) contravene any
existing applicable law, statute, rule or regulation or any judgment, decree or permit
to which the Borrower or any other Security Party is subject, (ii) conflict with, or
result in any breach of any of the terms of, or constitute a default under, any
agreement or other instrument to which the Borrower or any other Security Party is a
party or is subject to or by which it or any of its property is bound, (iii) contravene
or conflict with any provision of the memorandum and articles of association/articles
of incorporation/by-laws/statutes or other constitutional documents of the

26

 

	 	 	 	Borrower or any other Security Party or (iv) result in the creation or imposition of
or oblige the Borrower or any other Security Party to create any Encumbrance (other
than a Permitted Encumbrance) on any of the undertakings, assets, rights or revenues
of the Borrower or any other Security Party;
	 
	 	(e)	 	Financial Condition: the financial condition of the Borrower and of
the other Security Parties has not suffered any material deterioration since that
condition was last disclosed to the Bank;
	 
	 	(f)	 	No Immunity: neither the Borrower nor any other Security Party nor any
of their respective assets are entitled to immunity on the grounds of sovereignty or
otherwise from any legal action or proceeding (which shall include, without limitation,
suit, attachment prior to judgement, execution or other enforcement);
	 
	 	(g)	 	Shipping Company: the Borrower is a shipping company involved in the
owning of ships engaged in international voyages and earning profits in free foreign
currency;
	 
	 	(h)	 	Licences/Authorisation: 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 authorize, or required by any
Security Party in connection with, the execution, delivery, validity, enforceability or
admissibility in evidence of each of the Security Documents or the performance by each
Security Party of its obligations under the Security Documents has been obtained or
made and is in full force and effect and there has been no default in the observance of
any of the conditions or restrictions (if any) imposed in, or in connection with, any
of the same;
	 
	 	(i)	 	Perfected Securities: when duly executed, the Security Documents will
create a perfected security interest in favour of the Bank, with the intended priority,
in or over the assets and revenues intended to be covered, valid and enforceable
against the Borrower and the other relevant Security Parties;
	 
	 	(j)	 	No Notarisation/Filing/Recording: save for the registration of the
Mortgage in the Registry, it is not necessary to ensure the legality, validity,
enforceability or admissibility in evidence of this Agreement or any of the other
Security Documents that it or they or any other instrument be notarised, filed,
recorded, registered or enrolled in any court, public office or elsewhere

27

 

	 	 	 	or that any stamp, registration or similar tax or charge be paid on or in relation
to this Agreement or the other Security Documents;
	 
	 	(k)	 	Validity and Binding effect: the Security Documents constitute (or
upon their execution — and in the case of the Mortgage upon its registration at the
Registry — will constitute) valid and legally binding obligations of the relevant
Security Parties enforceable against the Borrower and the other Security Parties in
accordance with their respective terms and that there are no other agreements or
arrangements which may adversely affect or conflict with the Security Documents or the
security thereby created;
	 
	 	(l)	 	Valid Choice of Law: the choice of law agreed to govern this Agreement
and/or any other Security Document and the submission to the jurisdiction of the courts
agreed in each of the Security Documents are or will be, on execution of the respective
Security Documents, valid and binding on the Borrower and any other Security Party
which is or is to be a party thereto; and
	 
	 	(m)	 	Shareholdings: the Borrower is a wholly-owned Subsidiary of the
Grandunion Corporate Guarantor and on the Drop-down Date shall become wholly-owned
Subsidiary of the Newlead Corporate Guarantor and shall remain so throughout the
Security Period.

	6.2	 	Initial representations and warranties. The Borrower hereby further represents and warrants
to the Bank that:

	 	(a)	 	Direct obligations — Pari Passu: the obligations of the Borrower under
this Agreement are direct, general and unconditional obligations of the Borrower and
rank at least pari passu with all other present and future unsecured and unsubordinated
Indebtedness of the Borrower with the exception of any obligations which are
mandatorily preferred by law;
	 
	 	(b)	 	Information: all information, accounts, statements of financial
position, exhibits and reports furnished by or on behalf of the Security Parties to the
Bank in connection with the negotiation and preparation of this Agreement and each of
the other Security Documents are true and accurate in all material respects and not
misleading, do not omit material facts and all reasonable enquiries have been made to
verify the facts and statements contained therein; to the knowledge of the
Directors/Officers of the Borrower, there are no other facts the omission of which
would make any fact or statement therein misleading and, in the case of accounts and
statements of financial

28

 

	 	 	 	position, they have been prepared in accordance with generally accepted accounting
principles which have been consistently applied;
	 
	 	(c)	 	No Default: no Default has occurred and is continuing;
	 
	 	(d)	 	No Taxes: no Taxes are imposed by deduction, withholding or otherwise
on any payment to be made by any Security Party under this Agreement and/or any other
of the Security Documents or are imposed on or by virtue of the execution or delivery
of this Agreement and/or any other of the Security Documents or any document or
instrument to be executed or delivered hereunder or thereunder. In case that any Tax
exists now or will be imposed in the future, it will be borne by the Borrower;
	 
	 	(e)	 	No Default under other Indebtedness: to the knowledge of the
Directors/Officers of the Borrower and the other Security Parties, none of the Borrower
and the other Security Parties is in Default under any agreement relating to
Indebtedness to which it is a party or by which it may be bound;
	 
	 	(f)	 	Ownership/Flag/Seaworthiness/Class/Insurance of the Vessel: the Vessel
is:

	 	(i)	 	in the absolute and free from Encumbrances (other than in
favour of the Bank) ownership of the Owner who will on and after the relevant
Drawdown Date be the sole legal and beneficial owner of the Vessel;
	 
	 	(ii)	 	registered in the name of the Owner through the Registry under
the laws and flag of the Flag State;
	 
	 	(iii)	 	operationally seaworthy and in every way fit for service;
	 
	 	(iv)	 	classed with the Classification with the relevant
Classification Society, free of all recommendations and qualifications of such
Classification Society affecting her class;
	 
	 	(v)	 	insured in accordance with the provisions of this Agreement;
and
	 
	 	(vi)	 	managed by the Manager;

	 	(g)	 	No Charter: unless otherwise permitted in writing by the Bank, the
Vessel will not on or before the relevant Drawdown Date be subject to any charter or
contract nor to any agreement to enter into any charter or contract which, if entered
into after such Drawdown Date would have required the consent of the Bank under any of
the Security Documents and there will not on or before

29

 

	 	 	 	the relevant Drawdown Date be any agreement or arrangement whereby the Earnings of
the Vessel may be shared with any other person;
	 
	 	(h)	 	No Encumbrances: neither the Vessel, nor her Earnings, Requisition
Compensation or Insurances nor any other properties or rights which are, or are to be,
the subject of any of the Security Documents nor any part thereof will be subject to
any Encumbrances other than Permitted Encumbrances;
	 
	 	(i)	 	Compliance with Environmental Laws and Approvals: except as may
already have been disclosed by the Borrower in writing to, and acknowledged in writing
by, the Bank:

	 	(i)	 	the Borrower and its Related Companies have complied with the
provisions of all Environmental Laws;
	 
	 	(ii)	 	the Borrower and its Related Companies have obtained all
Environmental Approvals and are in compliance with all such Environmental
Approvals; and
	 
	 	(iii)	 	neither the Borrower nor any of its Related Companies have
received notice of any Environmental Claim relating to an amount exceeding
$500,000 that the Borrower or any of its Related Companies are not in
compliance with any Environmental Law or any Environmental Approval;

	 	(j)	 	No Environmental Claims

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

	 	aa)	 	and there is no Environmental Claim exceeding
$500,000 pending or, to the best of the Borrower’s knowledge and
belief, threatened against the Borrower or the Vessel or the Borrower’s
Related Companies or any other Relevant Ship; and
	 
	 	bb)	 	there has been no emission, spill, release or
discharge of a Material of Environmental Concern from the Vessel and or
any other vessel owned by, managed or crewed by or chartered to the
Borrower or, as the case may be, the Manager which could give rise to
an Environmental Claim exceeding $500,000;

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	 	(k)	 	Copies true and complete: the copies of each of the Management
Agreements delivered or to be delivered to the Bank pursuant to clause 7.2 are, or will
when delivered be, true and complete copies of such documents; such documents will when
delivered constitute valid and binding obligations of the parties thereto enforceable
in accordance with their respective terms and there will have been no amendments or
variations thereof or defaults thereunder;
	 
	 	(l)	 	Application made for DOC and SMC: the Operator has applied for a DOC
for itself and an SMC in respect of the Vessel and that neither the Borrower nor any
Operator is aware of any reason why such application may be refused;
	 
	 	(m)	 	ISPS Code: the Owner has obtained a valid and current ISSC in respect
of its Vessel and the Vessel is in compliance with the ISPS Code; and
	 
	 	(n)	 	Money laundering — acting for own account: The Borrower confirms that,
by entering into this Agreement and the other Security Documents, it is acting on its
own behalf and for its own account and it is obtaining the Loan for its own account and
the borrowing of the Commitment and the performance and discharge of the Borrower’s
obligations and liabilities under this Agreement and the other Security Documents to
which it is or is to be a party and other arrangements effected or contemplated by this
Agreement will not involve or lead to contravention of any law, official, requirement
or other regulatory measure or procedure implemented to combat “money laundering” as
defined in Article 1 of the Directive (91/308/EEC) of the Council of the European
Community or any Pertinent Jurisdiction.

	6.3	 	Representations Correct. At the time of entering into this Agreement all above
representations and warranties or any other information given by the Borrower to the Bank are
true and accurate.
	 
	6.4	 	Repetition of Representations and Warranties. The representations and warranties in this
Clause 6 shall be deemed to be repeated by the Borrower on each Drawdown Date and on each
Interest Payment Date throughout the Security Period.
	 
	7.	 	CONDITIONS PRECEDENT
	 
	7.1	 	Conditions precedent to the execution of this Agreement: The Borrower shall provide
the Bank prior to the execution of this Agreement the following documents and evidence in form
and substance satisfactory to the Bank:

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	 	(a)	 	a duly certified true copy of the Articles of Incorporation and By-Laws or the
Memorandum and Articles of Association, or of any other constitutional documents, as
the case may be, of each corporate Security Party;
	 
	 	(b)	 	a recent certificate of incumbency of each corporate Security Party issued by
the appropriate authority or, as appropriate, signed by the secretary or a director
thereof, stating the officers and the directors of each of them;
	 
	 	(c)	 	minutes of separate meetings of the directors and shareholders of each
corporate Security Party at which there was approved (inter alia) the entry into,
execution, delivery and performance of this Agreement, the other Security Documents and
any other documents executed or to be executed pursuant hereto or thereto to which the
relevant corporate Security Party is or is to be a party;
	 
	 	(d)	 	the original of any power(s) of attorney and any further evidence of the due
authority of any person signing this Agreement, the other Security Documents, the
Management Agreements and any other documents executed or to be executed pursuant
hereto or thereto on behalf of any corporate person;
	 
	 	(e)	 	evidence that all necessary licences, consents, permits and authorisations
(including exchange control ones) have been obtained by any Security Party for the
execution, delivery, validity, enforceability, admissibility in evidence and the due
performance of the respective obligations under or pursuant to this Agreement and the
other Security Documents;
	 
	 	(f)	 	any other documents or recent certificates or other evidence which would be
required by the Bank in relation to any corporate Security Party evidencing that the
relevant Security Party has been properly established, continues to exist validly and
to be in good standing; and
	 
	 	(g)	 	a declaration signed by the shareholders of any corporate Security Party
stating respectively the full names of the person or persons beneficially entitled as
shareholders/ stockholders of the entire issued and outstanding shares/ stock of each
of them.

	7.2	 	Conditions precedent to the making of the Commitment. The obligations of the Bank to make
available the Commitment or any part thereof is subject to the further condition that the Bank
on or before the Drawdown Date shall have received the following documents and evidence in
form and substance satisfactory to the Bank:

32

 

	 	(a)	 	each of the Grandunion Corporate Guarantee, Account Pledge Agreement, Mortgage,
General Assignment, any Charterparty Assignment and the Manager’s Undertaking duly
executed;
	 
	 	(b)	 	evidence that the Vessel is duly registered in the ownership of the Owner
through the Registry and under the laws and flag of the Flag State, free from any
Encumbrances save for Permitted Encumbrances;
	 
	 	(c)	 	evidence that the Mortgage has been or, as the case may be, will be, registered
against the Vessel through the Registry under the laws and flag of the Flag State;
	 
	 	(d)	 	evidence in form and substance satisfactory to the Bank that the Vessel has
been or will — on the Drawdown Date — be insured in accordance with the insurance
requirements provided for in this Agreement and the Mortgage including a Mortgagee’s
Interest Insurance for an amount equal to 110% of the amount of the Loan (herein “MII”)
which the Bank may at any time effect on such terms and with such insurers as shall
from time to time be determined by the Bank, to be followed by full copies of cover
notes, policies, certificates of entry or other contracts of insurance and irrevocable
authority is hereby given to the Bank at any time at its discretion to obtain copies of
the policies, certificates of entry or other contracts of insurance from the insurers
and/or obtain any information in relation to the Insurances effected or to be effected
in respect of the Vessel;
	 
	 	(e)	 	if the Bank so requires, a report signed by an independent firm of marine
insurance brokers appointed by the Bank at the expense of the Borrower confirming the
adequacy of the Insurances maintained on each Vessel;
	 
	 	(f)	 	certified true copy of the Management Agreement in respect of the Vessel;
	 
	 	(g)	 	all necessary confirmations by insurers of the Vessel that they will issue
letters of undertaking and endorse notice of assignment and loss payable clauses on the
Insurances, in form and substance satisfactory to the Bank in its sole discretion;
	 
	 	(h)	 	evidence from the Classification Society of the Vessel that the Vessel is
classed with the Classification with the Classification Society, and remains free from
any requirements or recommendations affecting her class;
	 
	 	(i)	 	evidence that the trading certificates of the Vessel are valid and in force;

33

 

	 	(j)	 	the Drawdown Notice duly executed and issued;
	 
	 	(k)	 	if the Bank so requires, a satisfactory to the Bank physical condition survey
report on the Vessel together with a comprehensive record inspection from a surveyor
appointed by the Bank, at the Borrower’s expense;
	 
	 	(l)	 	valuation of the Vessel, at the Borrower’s expense, as at a date determined by
the Bank but in any event before the relevant drawdown, prepared on the basis specified
in Clause 8.2 by major shipbrokers appointed and/or approved by the Bank in form and
substance satisfactory to the Bank in its sole discretion;
	 
	 	(m)	 	evidence satisfactory to the Bank that the Operator complies with the
requirements of the ISM Code, has obtained a DOC for itself, and in relation to the
Vessel, has obtained an SMC in respect of the Vessel issued pursuant to the ISM Code;
	 
	 	(n)	 	a copy of the ISSC issued pursuant to the ISPS Code in respect of the Vessel,
certified as true and in effect by the Borrower and the Manager;
	 
	 	(o)	 	payment of any fees due from the Borrower to the Bank pursuant to the terms of
Clause 10.8 or any other provision of the Security Documents;
	 
	 	(p)	 	evidence that the Earnings Account and the Retention Account have been duly
opened and all mandate forms, signature cards and authorities have been duly delivered;
and
	 
	 	(q)	 	due authorisation in form and substance satisfactory to the Bank authorising
the Bank to have access and/or obtain any copies of class records or other information
at its discretion from the Classification Society of the Vessel.

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

	 	(a)	 	the representations and warranties set out in Clause 6 and in each of the
Security Documents are true and correct on and as of each such time as if each was made
with respect to the facts and circumstances existing at such time;
	 
	 	(b)	 	no Default shall have occurred and be continuing or would result from the
drawdown; and

34

 

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

	7.4	 	General Conditions: The obligation of the Bank to make the Commitment first to be
drawn or any part thereof is subject to the further condition that the Bank, prior to or
simultaneously with the relevant drawdown, shall have received:

	 	(a)	 	draft opinions from lawyers appointed by the Bank and draft opinions from the
Security Parties’ legal counsel as to all the matters referred to in Clauses 6.1(a) and
(b) and all such aspects of law as the Bank shall deem relevant to this Agreement and
the other Security Documents and any other documents executed pursuant hereto or
thereto and any further legal or other expert opinion as the Bank at its sole
discretion may require;
	 
	 	(b)	 	confirmation from any agents nominated in this Agreement and elsewhere in the
other Security Documents for the acceptance of any notice or service of process, that
they consent to such nomination; and
	 
	 	(c)	 	an undertaking of the Borrower that it shall execute a receipt in writing in
form and substance satisfactory to the Bank including an acknowledgement and admission
of the Borrower to the effect that the Loan was drawn by the Borrower and a declaration
by the Borrower that all conditions precedent have been fulfilled, that there is no
Event of Default and that all the representations and warranties are true and correct.

	7.5	 	Waiver of conditions precedent: The conditions specified in this Clause 7 are
inserted solely for the benefit of the Bank and may be waived by the Bank in whole or in part
and with or without conditions.
	 
	7.6	 	Conditions subsequent:

	 	(a)	 	the Newlead Corporate Guarantee duly executed by the Newlead Corporate
Guarantor not later than five (5) days from the date of this Agreement; and
	 
	 	(b)	 	Original opinions within 15 days after the relevant Drawdown Date from lawyers
appointed by the Bank as to all matters referred to in Clauses 6.1(a) and (b) and all
such aspects of law as the Bank shall deem relevant to this Agreement and the other
Security Documents and any other documents executed pursuant hereto or thereto and any
further legal or other expert opinion as the Bank at its sole discretion may require.

35

 

	8.	 	COVENANTS
	 
	8.1	 	General: The Borrower hereby undertakes with the Bank that, from the date of this
Agreement and as long as any moneys are due and/or owing and/or outstanding under this
Agreement or any of the other Security Documents, it will:

	 	(a)	 	Financial Statements: prepare or procure to be prepared and furnished
to the Bank, in form and substance satisfactory to the Bank, with (i) annual, audited
(by auditors acceptable to the Bank) financial statements (including balance sheet and
profit and loss accounts) of the Newlead Corporate Guarantor (including the Borrower)
as soon as practicable but not later than 210 days after the end of the financial year
to which they relate, prepared in accordance with GAAP and audited combined or
consolidated financial statements or information in respect of the Group and (ii)
semi-annual combined financial statements of the Borrower within 90 days from the end
of each fiscal semester (herein, a “Semester Date”);
	 
	 	(b)	 	Financial Information: provide the Bank from time to time as the Bank
may request and in form and substance satisfactory to the Bank with information on the
financial conditions, actual and projected for the following 12 month period, cash flow
position, commitments and operations of each Security Party, including cash flow
analysis and voyage accounts of the Vessel with a breakdown of income and running
expenses showing net trading profit, trade payables and trade receivables, such
financial details to be certified by one of the directors of the relevant company or
the chief financial officer of the Borrower as to their correctness and promptly inform
the Bank of all major financial developments and any other Borrowed Money involving or
related to the Borrower and the Newlead Corporate Guarantor or any of them; and
	 
	 	(c)	 	Notice on adverse change or Default: immediately inform the Bank upon
becoming aware of any occurrence which might materially and adversely affect the
ability of the Borrower or any other Security Party to perform its respective
obligations under this Agreement and/or any of the other Security Documents and,
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;
	 
	 	(d)	 	Consents and licences: without prejudice to Clauses 6 and 7, obtain or
cause to be obtained, maintain in full force and effect and comply in all material

36

 

	 	 	 	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;

	 	(e)	 	Use of proceeds: use the Loan exclusively for the purposes specified
in Clause 1.1;
	 
	 	(f)	 	Information on the employment of the Vessel: provide the Bank from time
to time as the Bank may request with information on the employment of the Vessel and of
any Relevant Ship as well as on the terms and conditions of any charterparty, contract
of affreightment, agreement or related document in respect of the employment of the
Vessel and of any Relevant Ship, such information to be certified by one of the
directors of the Borrower as to their correctness;
	 
	 	(g)	 	Pari passu: ensure that its obligations under this Agreement shall,
without prejudice to the provisions of Clause 8.3, 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;
	 
	 	(h)	 	Delivery of reports: deliver to the Bank as many copies as the Bank
may reasonably require of every report, circular, notice or like document issued by any
Security Party to its shareholders or creditors generally;
	 
	 	(i)	 	Obligations under Security Documents: duly and punctually perform each
of the obligations expressed to be assumed by it under the Security Documents;
	 
	 	(j)	 	Payment on demand: pay to the Bank on demand any sum of money which is
payable by the Borrower to the Bank under this Agreement but in respect of which it is
not specified in any other Clause when it is due and payable; and
	 
	 	(k)	 	Know your customer and money laundering compliance: provide the Bank
with such documents and evidence as the Bank shall from time to time require, based on
law and regulations applicable from time to time and the Bank’s own internal guidelines
applicable from time to time to identify the Borrower and the other Security Parties,
including the ultimate legal and

37

 

	 	 	 	beneficial owner or owners of such entities, and any other persons involved or
affected by the transaction(s) contemplated by this Agreement.

	8.2	 	Security value maintenance

	 	(a)	 	Security shortfall: If at any time during the Security Period the
Security Value shall be less than the applicable Security Requirement, the Bank may
give notice to the Borrower requiring that such deficiency be remedied and then the
Borrower shall either:

	 	(i)	 	prepay within a period of thirty (30) days of the date of
receipt by the Borrower of the Bank’s said notice such sum in Dollars as will
result in the applicable 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
	 
	 	(ii)	 	within thirty (30) days of the date of receipt by the Borrower
of the Bank’s said notice constitute to the satisfaction of the Bank such
further security for the Outstanding Indebtedness 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
applicable Security Requirement as at such date. Such additional security
shall be constituted by:

	 	a)	 	additional pledged cash deposits in favour of
the Bank in an amount equal to the amount which would be required to be
prepaid under Clause 8.2(a)(i) with the Bank and in an account and
manner to be determined by the Bank; and/or
	 
	 	b)	 	any other security acceptable to the Bank at
its absolute discretion to be provided in a manner determined by the
Bank.

	 	 	 	The provisions of Clause 4.3 and 4.4 shall apply to prepayments under Clause
8.2(a)(i).

	 	(b)	 	Valuation of Vessel: The Vessel shall, for the purposes of this Clause
8.2, be valued in Dollars, ten (10) days prior to the relevant Drawdown Date (as the
Bank may determine) and thereafter as and when the Bank shall require (but at least
once per year) by one (1) first class independent firm of

38

 

	 	 	 	internationally known shipbrokers appointed by the Bank such valuation to be made
without, unless required by the Bank, physical inspection, and on the basis of a
sale for prompt delivery for cash at arms length on normal commercial terms as
between a willing buyer and a willing seller, without taking into account the
benefit or the burden of any charterparty concerning the Vessel. Such valuation
shall constitute the value of the Vessel for the purposes of this Clause 8.2 and
shall be binding upon the parties hereto until such time as any further such
valuation in respect of the Vessel shall be obtained.

	 	(c)	 	Information: The Borrower undertakes to the Bank to supply to the Bank
and to any such shipbrokers such information concerning its Vessel and its condition as
such shipbrokers may reasonably require for the purpose of making any such valuation.
	 
	 	(d)	 	Costs: All costs in connection with the Bank obtaining each valuation
of the Vessel referred to in Clause 8.2(b), and any valuation either of any additional
security for the purposes of ascertaining the Security Value at any time or
necessitated by the Borrower electing to constitute additional security pursuant to
Clause 8.2(a)(ii) shall be borne by the Borrower.
	 
	 	(e)	 	Valuation of additional security: For the purpose of this Clause 8.2,
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.
	 
	 	(f)	 	Documents and evidence: In connection with any additional security
provided in accordance with this Clause 8.2, the Bank shall be entitled to receive such
evidence and documents of the kind referred to in Clause 7 as may in the Bank’s opinion
be appropriate and such favorable legal opinions as the Bank shall in its absolute
discretion require.

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

	 	(a)	 	Negative pledge: permit any Encumbrance (other than a Permitted
Encumbrance) to subsist, arise or be created or extended over all or any part of its
present or future undertakings, assets, rights or revenues to secure or prefer any
present or future Indebtedness or other liability or obligation of such Borrower or any
other person;

39

 

	 	(b)	 	No merger: will procure that none of the Borrower will, without the
prior written consent of the Bank, merge or consolidate with any other person;
	 
	 	(c)	 	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(c) material in the opinion of the Bank in relation to the undertakings, assets,
rights and revenues of such Borrower) of its present or future undertaking, assets,
rights or revenues (otherwise than by transfers, sales or disposals for full
consideration in the ordinary course of trading) whether by one or a series of
transactions related or not;
	 
	 	(d)	 	Other business: undertake any business other than the ownership and
operation of its Vessel and the chartering of the Vessel to third parties;
	 
	 	(e)	 	Acquisitions: acquire any further assets other than its Vessel and
rights arising under contracts entered into by or on behalf of such Borrower in the
ordinary course of its business of owning, operating and chartering its Vessel;
	 
	 	(f)	 	Other obligations: incur any obligations except for obligations
arising under the Security Documents or contracts entered into in the ordinary course
of its business of owning, operating and chartering its Vessel (and for the purposes of
this Clause 8.3(f) fees to be paid pursuant to the Management Agreements shall be
considered as permitted obligations);
	 
	 	(g)	 	No borrowing: incur any Borrowed Money except for Borrowed Money
pursuant to the Security Documents;
	 
	 	(h)	 	Repayment of borrowings: repay the principal of, or pay interest on or
any other sum in connection with, any of its Borrowed Money except for Borrowed Money
pursuant to the Security Documents;
	 
	 	(i)	 	Guarantees: issue any guarantees or indemnities or otherwise become
directly or contingently liable for the obligations of any person, firm, or corporation
except pursuant to the Security Documents and except for guarantees (up to Two hundred
thousand Dollars ($200,000)) or indemnities from time to time required in the ordinary
course by any protection and indemnity or war risks association with which the Vessel
is entered, guarantees required to procure the release of the Vessel from any arrest,
detention, attachment or levy or guarantees or undertakings required for the salvage of
the Vessel);

40

 

	 	(j)	 	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;
	 
	 	(k)	 	Sureties: permit any Indebtedness of such Borrower to any person
(other than the Bank) to be guaranteed by any person (save, in the case of the
Borrower, for guarantees or indemnities from time to time required in the ordinary
course by any protection and indemnity or war risks association with which the Vessel
is entered, guarantees required to procure the release of the Vessel from any arrest,
detention, attachment or levy or guarantees or undertakings required for the salvage of
the Vessel);
	 
	 	(l)	 	Share capital and distribution: purchase or otherwise acquire for value
any shares of its capital or declare or distribute any of its present or future assets,
undertakings, rights or revenues to any of its shareholders or pay any dividends (save
for dividends paid with the prior written consent of the Bank);
	 
	 	(m)	 	Subsidiaries: without the prior written consent of the Bank form or
acquire any Subsidiaries;
	 
	 	(n)	 	Maintenance of Business Structure: not change the nature, organisation
and conduct of its business as Owner of the Vessel or carry on any business other than
the business carried on the date hereof;
	 
	 	(o)	 	Maintenance of Legal Structure: ensure that none of the documents
defining the constitution of the Borrower shall be altered in any manner whatsoever
without the prior written consent of the Bank (such consent not to be unreasonably
withheld);
	 
	 	(p)	 	Control: ensure that, throughout the Security Period, no change shall
be made directly or indirectly in the ownership, beneficial ownership, control or
management of the Borrower (except for the change of ownership from Grandunion
Corporate Guarantor to the Newlead Corporate Guarantor or any share therein or of the
Vessel from that evidenced to the Bank at the date of this Agreement without the prior
written consent of the Bank (which shall not be unreasonably withheld);
	 
	 	(q)	 	No Freight Derivatives: not (without the prior written consent of the
Bank) enter into any freight derivatives or any other instruments which have the effect
of hedging forward exposures to freight derivatives.

41

 

	8.4	 	Covenants Concerning the Vessel: The Borrower hereby further undertakes and agrees
with the Bank that it will:

	 	(a)	 	Conveyance on default: where the Vessel is (or is to be) sold in
exercise of any power conferred on the Bank, execute, forthwith upon request by the
Bank, such form of conveyance of the Vessel as the Bank may require;
	 
	 	(b)	 	Ownership/Management/Control: ensure that the Vessel is registered
under the laws of the Flag State and thereafter maintain her present ownership,
management, control and beneficial ownership (save for the transfer of the total
number of the issued and outstanding shares of the Borrower from the Grandunion
Corporate Guarantor to the Newlead Corporate Guarantor as provided herein);
	 
	 	(c)	 	Class: ensure that the Vessel will maintain its Classification free of
overdue recommendations, notations or average damage affecting class or permitted by
the relevant Classification Society and provide the Bank on demand with copies of all
class and trading certificates of the Vessel;
	 
	 	(d)	 	Insurances: ensure that all Insurances (as defined in the
Mortgage/General Assignment) of the Vessel are maintained and comply with all insurance
requirements specified in this Agreement and in the Mortgage, including a MII, which
the Bank may at any time effect on such terms and with such insurers as shall from time
to time be determined by the Bank, and in case of failure to maintain any Vessel so
insured, authorise the Bank (and such authorisation is hereby expressly given to the
Bank) to have the right but not the obligation to effect such Insurances on behalf of
the Owner (and in case that any Vessel remains in port for an extended period) to
effect port risks insurances at the cost of the Borrower which, if paid by the Bank,
shall be Expenses;
	 
	 	(e)	 	Transfer/Encumbrances: not without the prior written consent of the
Bank sell or otherwise dispose of the Vessel or any share therein or create or agree to
create or permit to subsist any Encumbrance over the Vessel (or any share or interest
therein) other than Encumbrances created or to be created pursuant to the Security
Documents;
	 
	 	(f)	 	Not imperil Flag, Ownership, Insurances: ensure that the Vessel is
maintained and trades in conformity with the laws of the Flag State or of its owning
company , the requirements of the Insurances and nothing is done or permitted to be
done which could endanger the flag of the Vessel or its

42

 

	 	 	 	unencumbered (other than Encumbrances in favour of the Bank and Encumbrances
permitted by this Agreement) ownership or its Insurances;

	 	(g)	 	Mortgage: execute, and procure the execution and registration of, the
Mortgage over the Vessel under the laws of the Flag State and always comply with all
the covenants provided for in the Mortgage;
	 
	 	(h)	 	Assignment of Earnings: assign or agree to assign otherwise than to
the Bank the Earnings or any part thereof;
	 
	 	(i)	 	Chartering: (a) not without the prior written consent of the Bank
(such consent not to be unreasonably withheld) enter into or agree to enter into in
respect of the employment of its Vessel on demise charter for any period and (b)
promptly advise the Bank on the entering into any Long Charterparty;
	 
	 	(j)	 	Manager: not without the prior written consent of the Bank (and then
only subject to such conditions as the Bank may impose) appoint a manager of its Vessel
(other than the Manager) or terminate or amend the terms of any Management Agreement;
	 
	 	(k)	 	Compliance with Environmental Laws: comply with, and procure that all
Environmental Affiliates of any Relevant Party comply with, all Environmental Laws
including without limitation, requirements relating to manning and establishment of
financial responsibility and to obtain and comply with, and procure that all
Environmental Affiliates of such Relevant Party obtain and comply with, all
Environmental Approvals and to notify the Bank forthwith:

	 	(i)	 	of any Environmental Claim for an amount or amounts in
aggregate exceeding $500,000 made against the Vessel and/or any Relevant Ship
and/or her respective owner; and
	 
	 	(ii)	 	upon becoming aware of any incident which may give rise to an
Environmental Claim and to keep the Bank advised in writing of the Borrower’s
response to such Environmental Claim on such regular basis and in such detail
as the Bank shall require;

	 	(l)	 	Vessel’s Inspection: upon the happening of a Default, permit the Bank,
at the Borrower’s expense: (i) by surveyors or other persons appointed by the Bank to
board the Vessel at all reasonable times for the purpose of inspecting her condition or
for the purpose of satisfying itself in regard to proposed or executed repairs and to
afford all proper facilities for such inspection and (ii)

43

 

	 	 	 	at any time by financial or insurance advisors or other persons appointed by the
Bank to review the operating and insurance records of the Borrower and the Vessel;

	 	(m)	 	Banking operations: ensure that all banking operations in connection
with the Vessel are carried out through the Lending Branch;
	 
	 	(n)	 	Liquidity: ensure that all times during the Security Period there is
standing to the credit of the Earnings Account, a free monthly average balance of not
less than Dollars One hundred fifty thousand ($150,000);
	 
	 	(o)	 	Compliance with ISM Code and ISPS Code: procure that the Manager and
any Operator:

	 	(iii)	 	will comply with and ensure that the Vessel and any Operator
by no later than the relevant Drawdown Date complies with the requirements of
the ISM Code, including (but not limited to) the maintenance and renewal of
valid certificates pursuant thereto throughout the Security Period;
	 
	 	(iv)	 	immediately inform the Bank if there is any threatened or
actual withdrawal of the Owner’s, the Manager’s or an Operator’s DOC or the
SMC in respect of the Vessel owned by the Owner;
	 
	 	(v)	 	promptly inform the Bank upon the issue to the Owner, the
Manager or any Operator of a DOC and to the Vessel of an SMC or the receipt by
the Owner, the Manager or any Operator of notification that its application for
the same has been refused;
	 
	 	(vi)	 	maintain at all times a valid and current ISSC in respect of
the Vessel;
	 
	 	(vii)	 	immediately notify the Bank in writing of any actual or
threatened withdrawal, suspension, cancellation or modification of the ISSC in
respect of the Vessel; and
	 
	 	(viii)	 	procure that the Vessel will comply at all times with the ISPS Code.

	8.5	 	Validity of Securities — Earnings — Taxes etc.: The Borrower hereby further
undertakes and agrees with the Bank that it will:

	 	(a)	 	Validity: ensure and procure that all governmental or other consents
required by law and/or any other steps required for the validity,

44

 

	 	 	 	enforceability and legality of this Agreement and the other Security Documents are
maintained in full force and effect and/or appropriately taken;

	 	(b)	 	Earnings: ensure and procure that, unless and until directed by the
Bank otherwise (i) all the Earnings of the Vessel shall be paid to the relevant
Earnings Account and (ii) the persons from whom the Earnings are from time to time due
are irrevocably instructed to pay them to such Earnings Account or to such other
account in the name of the relevant Borrower or the Borrower as shall be from time to
time determined by the Bank in accordance with the provisions hereof and of the
relevant Security Documents;
	 
	 	(c)	 	Taxes: pay all Taxes, assessments and other governmental charges when
the same fall due, except to the extent that the same are being contested in good faith
by appropriate proceedings and adequate reserves have been set aside for their payment
if such proceedings fail; and
	 
	 	(d)	 	Additional Documents: from time to time and within ten (10) days after
the Bank’s request execute and deliver to the Bank or procure the execution and
delivery to the Bank of all such documents as shall be deemed desirable at the
reasonable discretion of the Bank for giving full effect to this Agreement, and for
perfecting, protecting the value of or enforcing any rights or securities granted to
the Bank under any one or more of this Agreement, the other Security Documents and any
other documents executed pursuant hereto or thereto and in case that any conditions
precedent (with the Bank’s consent) have not been fulfilled prior to the relevant
Drawdown Date, such conditions shall be complied with within fourteen (14) days of such
Drawdown Date (unless the Bank agrees otherwise in writing) and failure to comply with
this covenant shall be an Event of Default, provided, however, that following
the Borrower’s/Guarantors’ request, the Bank, if it considers it appropriate or
necessary, may grant a reasonable extension to the aforementioned periods in case the
Borrower cannot disclose/provide the requested information/document, under the
circumstances arising at the time of the Bank’s request and within the time limit
specified hereinabove.

	8.6	 	Additional Financial Covenants — Compliance Certificate.

	 	(a)	 	Financial Covenants of the Newlead Corporate Guarantor: The Borrower
hereby covenants and undertakes with the Bank, that until the Outstanding Indebtedness
has been paid and discharged in full, it will procure and ensure that:

45

 

	 	(i)	 	at least 10% of the total issued share capital of Newlead is
directly held by Grandunion, into which Messrs. Michael Zolotas and Nikolaos
Fistes hold and shall hold throughout the Security Period at least 51% of its
total issued share capital;
	 
	 	(ii)	 	Messrs. Nikolaos Fistes and Michael Zolotas to remain Chairman
and CEO respectively of the Newlead Corporate Guarantor throughout the Security
Period; and
	 
	 	(iii)	 	the Newlead Corporate Guarantor shall comply with all its
obligations under the Loan Agreement including, without limitation, the
financial covenants set forth in clause 5.3 of the Newlead Corporate Guarantee.

	 	(b)	 	Compliance: The compliance of the Newlead Corporate Guarantor with the
covenants set out in this clause 8.6 shall be determined by the Bank in its sole
discretion on the basis of calculations made by the Bank at any time by reference to
the then latest consolidated financial statements of the Group delivered to the Bank
pursuant to clause 8.1(a). For the avoidance of doubt it is hereby agreed and
acknowledged that the Bank shall be entitled to make any such determinations and/or
calculations at any time, without regard to when any such financial statements are due
to be delivered or have been actually delivered to the Bank pursuant to clause 8.1(a).
	 
	 	(c)	 	Calculations: For the purposes of clause 8.6: (a) no item shall be
deducted or credited more than once in any calculation; and (b) any amount expressed in
a currency other than Dollars shall be converted into Dollars in accordance with the
GAAP consistently applied.
	 
	 	(d)	 	Compliance Certificate: The Borrower shall deliver to the Bank at the
end of each Financial Quarter, and at the same time as the unaudited financial
statements referred to in clause 8.1(a)(ii), a certified true copy of the Compliance
Certificate issued and signed by the Newlead Corporate Guarantor’s Chief Financial
Officer certifying that the covenants contained in Clause 5.3 of the Newlead Corporate
Guarantee are being complied with and providing full calculations supporting such
compliance derived from the then latest financial statements of the Group as lodged
with the Securities and Exchange Commission of the United States by way of Form 6K/20F,
such certificate to be substantially in the form agreed by the Bank set out in Schedule
2.

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	 	(e)	 	Additional financial covenants and guarantees: It is hereby expressly
agreed that in case the Newlead Corporate Guarantor accepts other or more financial
covenants and additional guarantees under loan agreements with other banks or financial
institutions which are more restrictive than those contained in this Agreement, the
Borrower shall procure that this Agreement and the Newlead Corporate Guarantee to be
amended in order such more restrictive or additional financial covenants to be included
herein and in the Newlead Corporate Guarantee.

	8.7	 	Excess Earnings. The Borrower shall procure that no later than 30th September of
each calendar year, and on the basis of the financial statements provided to the Bank pursuant
to Clause 8.1(a), an amount equal to 50% of the Excess Earnings for the Relevant Period shall
be transferred into the Retention Account for onwards application by the Bank in or towards
prepayment of the Balloon Instalment.
	 
	 	 	For the purpose of this Clause 8.7:
	 
	 	 	“Bond Issue” means the issue by the Newlead Corporate Guarantor of the initial amount of
$145,000,000 Bonds, purchased or (as the context may require) to be purchased by Marfin
Egnatia Bank S.A. and/or any of its affiliates;
	 
	 	 	“Excess Earnings” means as at any Relevant Period, an amount calculated in accordance with
the formula: Excess Earnings =Total Income — Operating Expenses for the Relevant Period
plus Debt Service plus $500,000 payable to the Newlead Corporate Guarantor by the Borrower
representing interest pursuant to the Bond Issue by the NewLead Corporate Guarantor;
	 
	 	 	“Total Income” means the total income of the Vessel for the Relevant Period less brokerage
fees and commissions and withholding taxes (if any);
	 
	 	 	“Debt Service” means payments of principal and interest made or due pursuant to this
Agreement in the Relevant Period (including sums standing to the credit of the Retention
Account);
	 
	 	 	“Relevant Period” means each financial year of the Borrower.
	 
	8.8	 	Covenants for the Securities Parties. The Borrower hereby further undertakes and agrees with
the Bank that it will ensure and procure that all other Security Parties and each of them duly
and punctually comply with the covenants in Clauses 8.1 to 8.6, which are applicable to
them/it mutatis mutandis.

47

 

	8.9	 	Newlead Corporate Guarantee. The Borrower hereby further undertakes and agrees with the Bank
that it will ensure and procure that the Newlead Corporate Guarantee shall be duly executed by
the Newlead Corporate Guarantor not later than five (5) days from the date of this Agreement.
	 
	9.	 	EVENTS OF DEFAULT
	 
	 	 	There shall be an Event of Default whenever an event described in Clauses 9.1 to 9.7 occurs:
	 
	9.1	 	Non Performance of Obligations

	 	(a)	 	the Borrower fails to pay on its due date, any sum due from the Borrower under
this Agreement and/or any of the other Security Documents to which it is a party at the
time, in the currency and in the manner stipulated herein and/or any of the other
Security Documents to which it is a party, or, in the case of any sum payable on
demand, within three (3) Banking Days of such demand; or
	 
	 	(b)	 	the Borrower fails to observe and perform any one or more of the covenants,
terms or obligations contained in this Agreement and/or any other Security Document to
which it is a party relating to the Insurances; or
	 
	 	(c)	 	the Borrower commits any breach of or omits to observe any of the covenants,
terms, obligations or undertakings under this Agreement and/or any of the other
Security Documents to which it is a party (other than failure to pay any sum when due
or to comply with any obligation concerning the Insurances) and, in respect of any such
breach or omission which in the opinion of the Bank is capable of remedy, such action
as the Bank may require shall not have been taken within ten (10) Banking Days of the
Bank notifying the Borrower of such required action to remedy the breach or omission;
or

	9.2	 	Events affecting the Security Parties

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

48

 

	 	(b)	 	any Security Party becomes or is deemed to be insolvent or suspends payment of
its debts or is (or is deemed to be) unable to or admits inability to pay its debts as
they fall due or proposes or enters into any composition, compromise or other
arrangement for the benefit of its creditors generally or good faith proceedings are
commenced in relation to any Security Party under any law, regulation or procedure
relating to reconstruction or readjustment of debts; or
	 
	 	(c)	 	an encumbrancer takes possession or a receiver or similar officer is appointed
of the whole or any part of the undertakings, assets, rights or revenues of any
Security Party or a distress, execution, sequestration or other process is levied or
enforced upon or sued out against any of the undertakings, assets, rights or revenues
of any Security Party and is not discharged within twenty (20) Banking Days; or
	 
	 	(d)	 	all or a material part of the undertakings, assets, rights or revenues of any
Security Party are seized, nationalised, expropriated or compulsorily acquired by or
under the authority of any government; or
	 
	 	(e)	 	any event occurs or (unless contested in good faith) proceeding is taken with
respect to any Security Party in any jurisdiction to which it is subject which has an
effect equivalent or similar to any of the events mentioned in Clauses 9.2(a) to
9.2(d); or
	 
	 	(f)	 	any Security Party suspends or ceases or threatens to suspend or cease to carry
on its business; or
	 
	 	(g)	 	there occurs, in the reasonable opinion of the Bank, a materially adverse
change in the financial condition of any Security Party, which jeopardises or imperils
(or may, in the Bank’s opinion, jeopardise or imperil) the rights conferred to the Bank
under the Security Documents; or
	 
	 	(h)	 	any other event occurs or circumstances arise which, in the reasonable opinion
of the Bank, materially and adversely affects either (i) the ability of any Security
Party to perform all or any of its obligations under or otherwise to comply with the
terms of this Agreement and/or any of the other Security Documents, or (ii) the
security created by this Agreement and/or any of the Security Documents; or
	 
	 	(i)	 	(without the prior written consent of the Bank which shall not be unreasonably
withheld) there is any change in the beneficial ownership of the

49

 

	 	 	 	shares in the Borrower or either Corporate Guarantor, which is not otherwise
permitted under the terms of this Agreement; or

	9.3	 	Representations Incorrect: any representation or warranty made or deemed to be made
or repeated by or in respect of any Security Party in or pursuant to this Agreement or any of
the other Security Documents or in any notice, certificate or statement referred to in or
delivered under this Agreement or any of the other Security Documents is or proves to have
been incorrect in any material respect, which jeopardises or imperils (or may, in the Bank’s
opinion, jeopardise or imperil) the rights conferred to the Bank under any of the Security
Documents; or
	 
	9.4	 	Cross-default: any Indebtedness of the Security Parties (or any of them) related to
an aggregate amount exceeding $1,000,000 (One million Dollars) is not paid when due or becomes
due and payable, or any creditor of the Security Parties (or any of them) becomes entitled to
declare any such Indebtedness due and payable prior to the date when it would otherwise have
become due, or any guarantee or indemnity given or any obligation or covenant undertaken or
agreement made by the Security Parties (or any of them) in respect of Indebtedness is not
honoured when due unless the relevant Security Party shall have satisfied the Bank that such
Indebtedness will not affect or prejudice in any way such Security Party’s ability to pay its
debts as they fall due; or
	 
	9.5	 	Events in relation to the Security Documents

	 	(a)	 	this Agreement or any of the other Security Documents shall at any time and for
any reason become invalid or unenforceable or otherwise cease to remain in full force
and effect, or if the validity or enforceability of any of the Security Documents shall
at any time and for any reason be contested by any party thereto (other than the Bank),
or if any such party shall deny that it has any, or any further, liability thereunder
or it becomes impossible or unlawful for the Borrower to fulfil any of its covenants
and obligations contained in this Agreement or any of the Security Documents or for the
Bank to exercise the rights vested in it thereunder or otherwise; or
	 
	 	(b)	 	any consent, authorisation, licence or approval of, or registration with or
declaration to, governmental or public bodies or authorities or courts required by the
Borrower to authorise or otherwise in connection with, the execution, delivery,
validity, enforceability or admissibility in evidence of this Agreement and/or any of
the other Security Documents or the performance the Borrower of its obligations under
this Agreement and/or any of the other Security Documents is modified in a manner
unacceptable to the Bank or is

50

 

	 	 	 	not granted or is revoked or terminated or expires and is not renewed or otherwise
ceases to be in full force and effect; or

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

	9.6	 	Events concerning the Vessel

	 	(a)	 	any Vessel becomes a Total Loss or is involved in an incident which in the
reasonable opinion of the Bank may result in the Vessel being subsequently determined
to be a Total Loss and the insurance indemnity is not paid by the insurers to the Bank
under the General Assignment within a period of one hundred eighty (180) days from the
date on which the incident which may result in the Vessel being subsequently determined
to be a Total Loss occurred; or
	 
	 	(b)	 	any Vessel ceases to be managed by the Manager (for any reason other than the
reason of a Total Loss or sale of the Vessel) without the approval of the Bank (such
approval not to be unreasonably withheld) and the relevant Borrower fails to appoint a
substitute Manager within ten (10) Banking Days after the termination of the relevant
Management Agreement with the previous Manager; or
	 
	 	(c)	 	any Vessel is arrested, confiscated, seized, taken in execution, impounded,
forfeited, detained in exercise or purported exercise of any possessory lien or other
claim and the Borrower shall fail to procure the release of the Vessel within a period
of thirty (30) Banking Days thereafter; or
	 
	 	(d)	 	(without prejudice to the generality of sub-Clause 9.1(b) and (c)) for any
reason whatsoever the provisions of Clause 8.4(o) are not complied with and/or any
Vessel ceases to comply with the ISM Code and/or the ISPS Code; or
	 
	 	(e)	 	the registration of any Vessel under the laws and flag of the Flag State is
cancelled or terminated without the prior written consent of the Bank; or

	9.7	 	Environmental Events

	 	(a)	 	any Relevant Party and/or the Manager and/or any of their respective
Environmental Affiliates fails to comply with any Environmental Law or any
Environmental Approval or the Vessel or any Relevant Ship is involved in

51

 

	 	 	 	any incident which gives rise or which may give rise to any Environmental Claim, if
in any such case, such non compliance or incident or the consequences thereof could
(in the reasonable opinion of the Bank) be expected to have a material adverse
effect on the business assets, operations, property or financial condition of the
Borrower or any other Security Party or on the security created by any of the
Security Documents; or

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

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

	 	(a)	 	by notice to the Borrower declare that the obligation of the Bank to make the
Commitment (or any part thereof) available shall be terminated; and/or
	 
	 	(b)	 	by notice to the Borrower declare that the Loan and all interest and commitment
commission accrued and all other sums payable under this Agreement and the other
Security Documents have become due and payable, whereupon the same shall, immediately
or in accordance with the terms of such notice, become due and payable without any
further diligence, presentment, demand of payment, protest or notice or any other
procedure from the Bank which are expressly waived by the Borrower; and/or
	 
	 	(c)	 	put into force and exercise all or any of the rights, powers and remedies
possessed by it under this Agreement and/or under any other Security Document and/or as
mortgagee of the Vessel, mortgagee, chargee or assignee or as the beneficiary of any
other property right or any other security (as the case may be) over the assets charged
or assigned to it under the Security Documents or otherwise (whether at law, by virtue
of any of the Security Documents or otherwise);

52

 

	9.9	 	Insolvency Events of Default
	 
	 	 	If an event occurs in respect of the Borrower or the other Security Parties of the type
described in Clause 9.2(a) to (e) (except (i) in the case when a petition was presented or
proceedings were commenced or a suit or writ were issued by a third party and the Borrower
or the relevant Security Party is defending itself in bona fide and (ii) in the case that
such events mentioned in Clause 9.2 relate to only a part of the undertakings, assets,
rights or revenues which in the opinion of the Bank does not affect the ability of the
Borrower or the relevant Security Party to perform its respective obligations under this
Agreement and/or the other Security Documents) the obligation of the Bank to make the Loan
available shall terminate immediately upon receipt by the Bank of the relevant information
(as such receipt shall be conclusively certified by a certificate of the Bank) and all
amounts payable under sub-clause 9.8(b) above shall become immediately due and payable
without any notice or other formality which is hereby expressly waived by the Borrower.
	 
	9.10	 	Proof of Default
	 
	 	 	It is agreed that (i) the non-payment of any sum of money in time will be proved
conclusively by mere passage of time and (ii) the occurrence of this (non payment) shall be
proved conclusively by a mere written statement of the Bank (save for manifest error).
	 
	9.11	 	Exclusion of Bank’s liability
	 
	 	 	Neither the Bank nor any receiver or manager appointed by the Bank, shall have any liability
to the Borrower or another Security Party:

	 	(a)	 	for any loss caused by an exercise of rights under, or enforcement of an
Encumbrance created by, a Security Document or by any failure or delay to exercise such
a right or to enforce such an Encumbrance; or
	 
	 	(b)	 	as mortgagee in possession or otherwise, for any income or principal amount
which might have been produced by or realised from any asset comprised in such an
Encumbrance or for any reduction (however caused) in the value of such an asset,

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

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	10.	 	INDEMNITIES — EXPENSES — FEES
	 
	10.1	 	Indemnity: The Borrower shall on demand (and it is hereby expressly undertaken by
the Borrower to) indemnify the Bank, without prejudice to any of the other rights of the Bank
under any of the Security Documents, against any loss (including loss of Margin, save in the
case under paragraph (c) hereinbelow) or expense which the Bank shall certify as sustained or
incurred as a consequence of:

	 	(a)	 	any default in payment by any of the Security Parties of any sum under any of
the Security Documents when due;
	 
	 	(b)	 	the occurrence of any Event of Default;
	 
	 	(c)	 	any prepayment of the Loan or part thereof being made under Clauses 4.3, 8.2(a)
or 12 or any other repayment of the Loan or part thereof being made otherwise than on
an Interest Payment Date relating to the part of the Loan prepaid or repaid; or
	 
	 	(d)	 	the Commitment not being advanced for any reason (excluding any default by the
Bank) after the Drawdown Notice relative thereto has been given,

	 	 	including, in any such case, but not limited to, any loss or expense sustained or incurred
in maintaining or funding the Loan or any part thereof or in liquidating or re-employing
deposits from third parties acquired to effect or maintain the Loan or any part thereof.
	 
	10.2	 	Expenses: The Borrower shall (and it is hereby expressly undertaken by the Borrower
to) pay to the Bank on demand:

	 	(a)	 	Initial and Amendment expenses: all expenses (including legal,
printing and out-of-pocket expenses) reasonably incurred by the Bank in connection with
the negotiation, preparation and execution of this Agreement and the other Security
Documents and of any amendment or extension of or the granting of any waiver or consent
under this Agreement and/or any of the Security Documents and/or in connection with any
proposal by the Borrower to constitute additional security pursuant to Clause 8.2(a),
whether any such security shall in fact be constituted or not;
	 
	 	(b)	 	Enforcement expenses: all expenses (including legal and out-of-pocket
expenses) incurred by the Bank in contemplation of, or otherwise in connection with,
the enforcement of, or preservation of any rights under, this Agreement and/or any of
the other Security Documents, or otherwise in

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	 	 	 	respect of the moneys owing under this Agreement and/or any of the other Security
Documents or the contemplation or preparation of the above, whether they have been
effected or not; and

	 	(c)	 	MII costs: reimburse the Bank on demand for any and all costs incurred
by the Bank (as supported by vouchers/invoices) in effecting and keeping effected a MII
for an amount of 110% of the aggregate of the Loan, which the Bank may at any time
effect on such terms, in such amounts and with such insurers as shall from time to time
be determined by the Bank, provided, however, that the Bank shall in its
absolute discretion appoint and instruct in respect of the MII the insurance brokers in
respect of such insurance and provided, further, that in the event that the
Bank effects any such insurance on the basis of any mortgagee’s open cover, the
Borrower shall pay on demand to the Bank their proportion of premium due in respect of
the Vessel for which such insurance cover has been effected by the Bank, and any
certificate of the Bank in respect of any such premium due by the Borrower (as
supported by the necessary invoices/vouchers) shall (save for manifest error) be
conclusive and binding upon the Borrower; and
	 
	 	(d)	 	Other expenses: any and all other Expenses.

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

	10.3	 	Stamp duty: The Borrower shall pay any and all stamp, registration and similar taxes
or charges (including those payable by the Bank excluding income taxes on the overall net
income of the Bank) imposed by governmental authorities in relation to this Agreement and any
of the other Security Documents, and shall indemnify the Bank against any and all liabilities
with respect to, or resulting from delay or omission on the part of the Borrower to pay such
stamp, taxes or charges.
	 
	10.4	 	Environmental Indemnity: The Borrower shall indemnify the Bank on demand and hold
the Bank harmless from and against all costs, expenses, payments charges, losses, demands,
liabilities, actions, proceedings (whether civil or criminal) penalties, fines, damages,
judgements, orders, sanctions or other outgoings of whatever nature which may be suffered,
incurred or paid by, or made or asserted against the Bank at any time, whether before or after
the repayment in full of principal and interest under this Agreement, relating to, or arising
directly or indirectly in any manner or for any cause or reason out of an Environmental Claim
made or asserted against the Bank.

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	10.5	 	Currencies: If any sum due from the Borrower under any of the Security Documents or
any order or judgement given or made in relation hereto has to be converted from the currency
(the “first currency”) in which the same is payable under the relevant Security Document or
under such order or judgement into another currency (the “second currency”) for the purpose of
(i) making or filing a claim or proof against the Borrower or any other Security Party, as the
case may be, or (ii) obtaining an order or judgement in any court or other tribunal or (iii)
enforcing any order or judgement given or made in relation to any of the Security Documents,
the Borrower shall (and it is hereby expressly undertaken by the Borrower to) indemnify and
hold harmless the Bank from and against any loss suffered as a result of any difference
between (a) the rate of exchange used for such purpose to convert the sum in question from the
first currency into the second currency and (b) the rate or rates of exchange at which the
Bank may in the ordinary course of business purchase the first currency with the second
currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such
order, judgement, claim or proof. The term “rate of exchange” includes any premium and costs
of exchange payable in connection with the purchase of the first currency with the second
currency.
	 
	10.6	 	Maintenance of the Indemnities: The indemnities contained in this Clause 10 shall
apply irrespective of any indulgence granted to the Borrower or any other party from time to
time and shall continue to be in full force and effect notwithstanding any payment in favour
of the Bank and any sum due from the Borrower under this Clause 10 will be due as a separate
debt and shall not be affected by judgement being obtained for any other sums due under any
one or more of this Agreement, the other Security Documents and any other documents executed
pursuant hereto or thereto.
	 
	10.7	 	Communications Indemnity: It is hereby agreed in connection with communications
that:

	 	(a)	 	Express authority is hereby given by the Borrower to the Bank to accept (at the
sole discretion of the Bank) all tested or untested communications given by facsimile,
telex, cable or otherwise, regarding any or all of the notices, requests, instructions
or other communications under this Agreement, subject to any restrictions imposed by
the Bank relating to such communications including, without limitation (if so required
by the Bank), the obligation to confirm such communications by letter.
	 
	 	(b)	 	The Borrower shall recognise any and all of the said notices, requests,
instructions or other communications as legal, valid and binding, when these notices,
requests, instructions or communications come from the fax numbers

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	 	 	 	mentioned in Clause 15.1 or any other fax usually used by it or its managing
company.

	 	(c)	 	The Borrower hereby assumes full responsibility for the execution of the said
notices, requests, instructions or communications by the Bank and promises and
recognises that the Bank shall not be held responsible for any loss, liability or
expense that may result from such notices, requests, instructions or other
communications. It is hereby undertaken by the Borrower to indemnify in full the Bank
from and against all actions, proceedings, damages, costs, claims, demands, expenses
and any and all direct and/or indirect losses which the Bank may suffer, incur or
sustain by reason of the Bank following such notices, requests, instructions or
communications.
	 
	 	(d)	 	With regard to notices, requests, instructions or communications issued by
electronic and/or mechanical processes (e.g. by facsimile, telex, but not by email),
the risk of equipment malfunction, including, without limitation, paper shortage,
transmission errors, omissions and distortions is assumed fully and accepted by the
Borrower, save in case of Bank’s wilful misconduct and/or gross negligence.
	 
	 	(e)	 	The risks of misunderstandings and errors of notices, requests, instructions or
communications being given as mentioned above, are for the Borrower and the Bank will
be indemnified in full pursuant to this Clause save in case of Bank’s wilful
misconduct.
	 
	 	(f)	 	The Bank shall have the right to ask the Borrower to furnish any information
the Bank may require to establish the authority of any person purporting to act on
behalf of the Borrower for these notices, requests, instructions or communications but
it is expressly agreed that there is no obligation for the Bank to do so. The Bank
shall be fully protected in, and the Bank shall incur no liability to the Borrower for
acting upon the said notices, requests, instructions or communications which were
believed by the Bank in good faith to have been given by the Borrower or by any of its
authorised representative(s).
	 
	 	(g)	 	It is undertaken by the Borrower to safeguard the function and the security of
the electronic and mechanical appliance(s) such as telex(es), fax(es) (but not email)
etc., as well as the code word list, if any, and to take adequate precautions to
protect such code world list from loss and to prevent its terms becoming known to any
persons not directly concerned with its use. The Borrower shall hold the Bank harmless
and indemnified from all claims,

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	 	 	 	losses, damages and expenses which the Bank may incur by reason of the failure of
the Borrower to comply with the obligations under this Clause and/or this Agreement.

	10.8	 	Arrangement Fee. The Borrower has, or as the case may be, shall pay to the Bank on the date
hereof a non-refundable arrangement fee in the amount of Sixty two thousand Dollars ($62,000).
The fee referred to in this Clause 10.8 is not refundable and shall be payable by the Borrower
to the Bank whether or not any part of the Commitment is ever advanced.
	 
	11.	 	SECURITY, APPLICATION, SET-OFF AND EARNINGS ACCOUNTS
	 
	11.1	 	Securities: As security for the due and punctual repayment of the Loan and payment of
interest thereon as provided in this Agreement and of all other Outstanding Indebtedness, the
Borrower shall ensure and procure that the following Security Documents are duly executed and,
where required, registered in favour of the Bank in form and substance satisfactory to the
Bank at the time specified herein or otherwise as required by the Bank and ensure that such
security consists, on the Drawdown Date, of:

	 	(a)	 	the Mortgage duly registered over the Vessel through the Registry;
	 
	 	(b)	 	the General Assignment;
	 
	 	(c)	 	the Corporate Guarantees;
	 
	 	(d)	 	the Manager’s Undertaking;
	 
	 	(e)	 	the Account Pledge Agreement; and
	 
	 	(f)	 	in case the Vessel is chartered under a Long Charterparty, on the relevant
Drawdown Date or at any time thereafter, the Charterparty Assignment and the
Charterparty Assignment Acknowledgement.

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

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	 	 	supported by any appropriate legal opinions) may be necessary or desirable for perfecting
the security contemplated or constituted by the Security Documents.

	11.3	 	Application of funds: All moneys received by the Bank under or pursuant to any of
the Security Documents and expressed to be applicable in accordance with this Clause 11.3
shall be applied by the Bank in the following manner:

	 	(a)	 	Firstly in or towards payment of Expenses and all sums other than
principal or interest which may be due to the Bank under this Agreement and the other
Security Documents or any of them at the time of application;
	 
	 	(b)	 	Secondly in or towards payment of any default interest;
	 
	 	(c)	 	Thirdly in or towards payment of any arrears of interest (other than
default interest) due in respect of the Loan or any part thereof;
	 
	 	(d)	 	Fourthly in or towards repayment of the Loan whether the same is due
and payable or not;
	 
	 	(e)	 	Fifthly in or towards payment to the Bank for any loss suffered by
reason of any such payment in respect of principal not being effected on an Interest
Payment Date relating to the part of the Loan repaid; and
	 
	 	(f)	 	Sixthly the surplus (if any) shall be paid to the Borrower or to
whomsoever else shall be entitled to receive such surplus.

	11.4	 	Set off: Express authority is hereby given by the Borrower to the Bank without
prejudice to any of the rights of the Bank at law, contractually or otherwise, at any time
after an Event of Default has occurred and is continuing but without notice to the Borrower:

	 	(a)	 	to apply any credit balance standing upon any account of the Borrower with any
branch of the Bank and in whatever currency in or towards satisfaction of any sum due
to the Bank from the Borrower under this Agreement and/or any of the other Security
Documents;
	 
	 	(b)	 	in the name of the Borrower and/or the Bank to do all such acts and execute all
such documents as may be necessary or expedient to effect such application; and
	 
	 	(c)	 	to combine and/or consolidate all or any accounts in the name of the Borrower
with the Bank.

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

	11.5	 	Earnings Account and Retention Account

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

	 	(i)	 	first: in payment of any and all sums whatsoever due
and payable to the Bank hereunder (such sums to be paid in such order as the
Bank may in its sole discretion elect);
	 
	 	(ii)	 	second: during each month of the Security Period (but
by no later than, in the case of the first such month, the date falling thirty
(30) days after the Drawdown Date and, in the case of each subsequent month,
the same date of that month), the Borrower shall cause to be transferred from
the Earnings Account to the Retention Account out of the aggregate amount of
the Earnings of the Vessel received in the Earnings Account during the
preceding month:

	 	a)	 	one third (1/3rd) of the amount of the
Repayment Instalment specified in Clause 4.1 falling due for payment on
the next following Repayment Date; and
	 
	 	b)	 	the relevant fraction of the amount of interest
on the Loan falling due on the next due date for payment of interest
under this Agreement.

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

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	 	(b)	 	If the aggregate amount of the Earnings of the Vessel received in the Earnings
Account is insufficient in any month for the required transfer to be made from the
Earnings Account to the Retention Account in accordance with Clause 11.5(a), the
Borrower shall make up the amount of such insufficiency on demand from the Bank, but,
without prejudice to its right to make such demand, the Bank may elect to make up the
whole or any part of such insufficiency by increasing the amount of any transfer to be
made in accordance with Clause 11.5(a)(ii) from the aggregate amount of such Earnings
received in the next or subsequent months.
	 
	 	(c)	 	Until the occurrence of an Event of Default (or an event which, with the giving
of notice and/or lapse of time or other applicable condition, might constitute an Event
of Default), the Bank shall on each Repayment Date and on each due date for the payment
of interest under this Agreement apply in accordance with the provisions of Clause 8.1
the relevant part of the balance then standing to the credit of the Retention Account
as shall be required to make payment of the Repayment Instalment specified in Clause
4.1 then due under the terms of this Agreement or payment of interest then due under
the terms of this Agreement and such transfer shall constitute a pro tanto satisfaction
of the Borrower’ obligations to pay such repayment instalment or interest (as the case
may be) then due under this Agreement.
	 
	 	(d)	 	Any amounts for the time being standing to the credit of the Retention Account
shall bear interest at the rate from time to time offered by the Bank to its customers
for Dollar deposits of similar amounts and for periods similar to those for which such
amounts are likely to remain standing to the credit of the Retention Account. Such
interest shall, provided that the foregoing provisions of this Clause 11.5
shall have been complied with and provided that no Event of Default (or event
which, with the giving of notice and/or lapse of time or other applicable condition,
might constitute an Event of Default) shall have occurred, be released to the Borrower.
	 
	 	(e)	 	Nothing herein contained shall be deemed to affect the absolute obligation of
the Borrower to pay interest on and to repay the Loan as provided in Clauses 3 and 6 or
shall constitute a manner or postponement thereof.
	 
	 	(f)	 	The Borrower hereby irrevocably authorises the Bank to make from the Earnings
Account any and all above payments and repayments as and when the same fall due or at
any time thereafter. The Bank shall advise the Borrower in respect of any such payment
or repayment.

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	 	(g)	 	The Borrower will comply with any written requirement of the Bank from time to
time as to the location or re-location of the Earnings Account and the Retention
Account (or either of them) and will from time to time enter into such documentation as
the Bank may reasonably require in order to create or maintain in favour of the Bank an
Encumbrance in the Earnings Account and the Retention Account, all at cost and expense
of the Borrower.
	 
	 	(h)	 	The Borrower hereby covenants with the Bank that the Earnings Account, the
Retention Account and any moneys therein shall not be charged, assigned, transferred or
pledged nor shall there be granted by the Borrower or suffered to arise any third party
rights over or against the whole or any part of the Earnings Account other than in
favour of the Bank.
	 
	 	(i)	 	The Earnings Account shall be operated in accordance with the Bank’s usual
terms and conditions (full knowledge of which the Borrower hereby acknowledges) and
subject to the Bank’s usual charges levied on such accounts and/or transactions
conducted on such accounts (as from time to time notified by the Bank to the Borrower).
	 
	 	(j)	 	The Borrower hereby warrants that sufficient monies to meet the next Repayment
Instalment plus interest thereon will be accumulated each and every month in the
Retention Account.

	 	(k)	 	After the occurrence of an Event of Default the Bank shall be entitled, but not
bound, to apply the balance (if any) including any accrued interest standing to the
credit of the Earnings Account and the Retention Account in accordance with the
provisions of Clause 11.3.
	 
	 	(l)	 	Upon payment in full of all principal, interest and all other amounts due to
the Bank under the terms of this Agreement and the other Security Documents, any
balance then standing to the credit of the Retention Account and/or the Earnings
Account shall be released and paid to the Borrower or to whomsoever else may be
entitled to receive such balance.

	12.	 	UNLAWFULNESS, INCREASED COSTS
	 
	12.1	 	Unlawfulness: If any change in, or introduction of, any law, regulation or
regulatory requirement or any request of any central bank, monetary, regulatory or other
authority or any order of any court renders it unlawful or contrary to any such regulation,
requirement, request or order for the Bank to make available the Commitment (or any part
thereof) or to maintain or fund the Loan, notice shall be given promptly by the Bank to the
Borrower and, if the Commitment or any part

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	 	 	thereof has been made available by the Bank to the Borrower, the Borrower shall be obliged
to prepay the Loan in accordance with the terms of this Agreement, together with accrued
interest thereon to the date of prepayment and all other sums payable by the Borrower under
this Agreement and the obligations of the Bank shall thereupon terminate, whereupon the Bank
shall give prompt notice to the Borrower of such termination.

	12.2	 	Mitigation: If circumstances arise which would result in a notification by the Bank
to the Borrower under this Clause then, without in any way limiting the rights of the Bank
under this Clause, the Bank shall use reasonable endeavours to transfer its obligations,
liabilities and rights under this Agreement and the Security Documents to another office or
financial institution not affected by the circumstances, but the Bank shall be under no
obligation to take any such action if in its opinion, to do so would or might:

	 	(a)	 	have an adverse effect on its business, operations or financial condition; or
	 
	 	(b)	 	involve it in any activity which is unlawful or prohibited or any activity that
is contrary to, or inconsistent, with any regulation; or
	 
	 	(c)	 	involve it in any expense (unless indemnified to its reasonable satisfaction)
or tax disadvantage.

	12.3	 	Increased Cost: If the result of (a) any change in, or in the interpretation or
application of, or the introduction of, any law or any regulation, directive, 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) by any
governmental authority in any country the laws or regulations of which are applicable on the
Bank or (b) compliance by the Bank with any request from or requirement of any central bank
(including the European Central Bank) or other applicable fiscal or monetary authority
(whether or not having the force of law, but, if not having the force of law, with which the
Bank or, as the case may be, its holding company habitually complies), including (without
limitation) those relating to Taxation, stock or capital adequacy, liquidity, reserve assets,
cash ratio deposits and special deposits or other banking or monetary controls or requirements
which affects the manner in which the Bank allocates capital resources to its obligations
hereunder and the other Security Documents and those (including, but not limited to, “Basle
II”) which shall replace, amend and/or supplement the provisions set out in the statement (as
in effect as of the date of this Agreement) of the Basle I committee on banking supervision
dated July 1988 and entitled “international

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	 	 	convergence of capital measurement and capital structures” or any amendatory or substitute
agreement thereof, is to:

	 	(a)	 	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
	 
	 	(b)	 	increase the cost to, or impose an additional cost on, the Bank or its holding
company in making or keeping available the Commitment or maintaining or funding the
Loan; and/or
	 
	 	(c)	 	reduce the amount payable or the effective return to the Bank under any of the
Security Documents; and/or
	 
	 	(d)	 	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
	 
	 	(a)	 	require the Bank or its holding company to make a payment or forgo a return on
or calculated by reference to any amount received or receivable by the Bank under any
of the Security Documents; and/or
	 
	 	(e)	 	require the Bank to incur or sustain a loss (including any 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 case (subject to Clause 12.6) the Borrower shall pay to the Bank, from time
to time, upon demand, such additional moneys as shall indemnify the Bank for any increased
or additional cost, reduction, payment, foregone return or loss whatsoever.
	 
	12.4	 	Claim for increased cost: The Bank will promptly notify the Borrower of any
intention to claim indemnification pursuant to Clause 12.3 and such notification will be a
conclusive and full evidence binding on the Borrower as to the amount of any increased cost or
reduction and the method of calculating the same (save in case of manifest error). A claim
under Clause 12.3 may be made at any time and must be discharged by the Borrower within
fifteen (15) Banking Days of demand. It shall not be a defence to a claim by the Bank under
this Clause 12.3 that any increased cost or reduction could have been avoided by the Bank.
Any amount due from the

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	 	 	Borrower under Clause 12.3 shall be due as a separate debt and shall not be affected by
judgement being obtained for any other sums due under or in respect of this Agreement.

	12.5	 	Option to prepay: If any additional amounts are required to be paid by the Borrower
to the Bank by virtue of Clause 12.3, the Borrower shall be entitled, on giving the Bank not
less than three (3) days prior notice in writing, to prepay the Loan and accrued interest
thereon, together with all other Outstanding Indebtedness on the tenth (10th)
Banking Day from the date of receipt of such notice by the Bank. Any such notice, once given,
shall be irrevocable.
	 
	12.6	 	Exception: Nothing in Clause 12.3 shall entitle the Bank to receive any amount in
respect of compensation for any such liability to Taxes, increased or additional cost,
reduction, payment, foregone return or loss to the extent that the same is subject of an
additional payment under Clause 5.3.
	 
	13.	 	ASSIGNMENT, PARTICIPATION, LENDING BRANCH
	 
	13.1	 	Binding Effect: This Agreement shall be binding upon and inure to the benefit of the
Bank and the Borrower and their respective successors and permitted assigns.
	 
	13.2	 	No Assignment by the Borrower: The Borrower and any other Security Parties may not
assign or transfer any of their respective rights and/or obligations under this Agreement or
any of the other Security Documents or any documents executed pursuant to this Agreement
and/or the other Security Documents.
	 
	13.3	 	Assignment by the Bank:

	 	(a)	 	The Bank may, at any time and without the consent of the Borrower freely
assign, transfers or in any other manner grants participation in respect of all or any
of part of its rights and benefits hereunder and under the Security Documents or freely
grant participations in its interest in the Loan to (in any of the foregoing cases) any
subsidiary or holding company of the Bank or to any subsidiary of such holding company
or to another affiliate of the Bank.
	 
	 	(b)	 	The Bank may, subject to first obtaining the written consent of the Borrower
(such consent not to be unreasonably withheld and the request for which shall be
promptly responded to by the Borrower), at any time assign all or any of its rights and
benefits hereunder and the Security Documents or grant participations in its interest
in the Loan to (in any of the foregoing cases) any prime bank(s) with shipping
experience.

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	13.4	 	Any cost of such assignment or transfer or granting participation shall be for the account of
the Bank.
	 
	13.5	 	Documentation: If the Bank assigns, transfers or in any other manner grants
participation in respect of all or any part of its rights or benefits or transfers all or any
of its obligations as provided in this Clause 13 the Borrower undertakes, immediately on being
requested to do so by the Bank, to enter into and procure that each Security Party enters into
such documents as may be necessary or desirable to transfer to the assignee, transferee or
participant all or the relevant part of the interest of the Bank in the Security Documents and
all relevant references in this Agreement to the Bank shall thereafter be construed as a
reference to the Bank and/or assignee, transferee or participant of the Bank to the extent of
their respective interests and, in the case of a transfer of all or part of the obligations of
the Bank, the Borrower shall thereafter look only to the assignee, transferee or participant
in respect of that proportion of the obligations of the Bank under this Agreement assumed by
such assignee, transferee or participant. The Borrower hereby expressly consents to any
subsequent transfer of the rights and obligations of the Bank and undertakes that it shall
join in and execute such supplemental or substitute agreements as may be necessary to enable
the Bank to assign and/or transfer and/or grant participation in respect of its rights and
obligations to another branch or to one or more banks or financial institutions in a syndicate
or otherwise.
	 
	13.6	 	Disclosure of information: All information furnished to the Bank by the Borrower
pursuant to this Agreement (and which is not at any time in the public domain) shall be
treated as confidential by the Bank. Such information regarding the Security Parties may be
disclosed by the Bank (i) to agents, professional advisers, bank inspectors and employees of
the Bank to the extent required for the proper fulfilment of their obligations under or in
relation to this Agreement, (ii) to any potential assignee or participant of the Bank subject
to the prior written consent of the Borrower (such consent not to be unreasonably withheld) in
respect of the assignments and participations pursuant to this Clause 13 and (iii) as may be
required in order to enforce the provisions of the Security Documents and/or by law or
governmental regulations or authority or by litigation. Any disclosure of information under
this Clause 13 shall always be subject to an obligation of confidentiality by the person to
whom the disclosure is made.
	 
	13.7	 	Change of Lending Branch: The Bank shall be at liberty to transfer the Loan to any
branch or branches, and upon notification of any such transfer, the word “Bank” in this
Agreement and in the other Security Documents shall mean the Bank, acting

66

 

	 	 	through such branch or branches and the terms and provisions of this Agreement and of the
other Security Documents shall be construed accordingly.

	14.	 	MISCELLANEOUS
	 
	14.1	 	Cumulative Remedies: The rights and remedies of the Bank contained in this Agreement
and the other Security Documents are cumulative and not neither exclusive of each other nor of
any other rights or remedies conferred by law.
	 
	14.2	 	Waivers: No failure, delay or omission by the Bank to exercise any right, remedy or
power vested in the Bank under this Agreement and/or the other Security Documents or by law
shall impair such right or power, or be construed as a waiver of, or as an acquiescence in any
default by the Borrower, nor shall any single or partial exercise by the Bank of any power,
right or remedy preclude any other or further exercise thereof or the exercise of any other
power, right or remedy. In the event of the Bank on any occasion agreeing to waive any such
right, remedy or power, or consent to any departure from the strict application of the
provisions of this Agreement or of any other Security Document, such waiver shall not in any
way prejudice or affect the powers conferred upon the Bank under this Agreement and the other
Security Documents or the right of the Bank thereafter to act strictly in accordance with the
terms of this Agreement and the other Security Documents. No modification or waiver by the
Bank of any provision of this Agreement or of any of the other Security Documents nor any
consent by the Bank to any departure therefrom by any Security Party shall be effective unless
the same shall be in writing and then shall only be effective in the specific case and for the
specific purpose for which given. No notice to or demand on any such party in any such case
shall entitle such party to any other or further notice or demand in similar or other
circumstances.
	 
	14.3	 	Integration of Terms: This Agreement contains the entire agreement of the parties
and its provisions supersede the provisions of the commitment letter dated 2nd
June, 2010 (save for the provisions thereof which relate to fees) any and all other prior
correspondence and oral negotiation by the parties in respect of the matters regulated by this
Agreement.
	 
	14.4	 	Amendments: This Agreement and any other Security Documents shall not be amended or
varied in their respective terms by any oral agreement or representation or in any other
manner other than by an instrument in writing of even date herewith or subsequent hereto
executed by or on behalf of the parties hereto or thereto.

67

 

	14.5	 	Invalidity of Terms: In the event of any provision contained in one or more of
this Agreement, the other Security Documents and any other documents executed pursuant hereto
or thereto being invalid, illegal or unenforceable in any respect under any applicable law in
any jurisdiction whatsoever, such provision shall be ineffective as to the jurisdiction only
without affecting the remaining provisions hereof or thereof. If, however, this event becomes
known to the Bank prior to the drawdown of the Commitment or of any part thereof the Bank
shall be entitled to refuse drawdown until this discrepancy is remedied. In case that the
invalidity of a part results in the invalidity of the whole agreement, it is hereby agreed
that there will exist a separate obligation of the Borrower for the prompt payment to the Bank
of all the Outstanding Indebtedness. Where, however, the provisions of any such applicable
law may be waived, they are hereby waived by the parties hereto to the full extent permitted
by the law to the intent that this Agreement, the other Security Documents and any other
documents executed pursuant hereto or thereto shall be deemed to be valid binding and
enforceable in accordance with their respective terms.

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

	14.7	 	Language and genuineness of documents

	 	(a)	 	Language: All certificates, instruments and other documents to be
delivered under or supplied in connection with this Agreement or any of the other
Security Documents shall be in the English language.
	 
	 	(b)	 	Certification of documents: Any copies of documents delivered to the
Bank shall be duly certified as true, complete and accurate copies by appropriate
authorities or legal counsel practicing in Greece or otherwise as it will be acceptable
to the Bank at the sole discretion of the Bank.
	 
	 	(c)	 	Certification of signature: Signatures on Board or shareholder
resolutions, Secretary’s certificates and any other documents are, at the discretion of
the Bank, to be verified for their genuineness by appropriate Consul or other competent
authority.

	14.8	 	Further assurances: The Borrower undertakes that the Security Documents shall both
at the date of execution and delivery thereof and so long as any moneys are owing under any of
the Security Documents be valid and binding obligations of the respective parties thereto and
enforceable in accordance with their respective terms

68

 

	 	 	and that it will (unless otherwise
provided herein), at its expense, execute, sign,
perfect and do, and will procure the execution, signing, perfecting and doing by each of the
other Security Parties of, any and every such further assurance, document, act or thing as
in the reasonable opinion of the Bank may be necessary or desirable for perfecting the
security contemplated or constituted by the Security Documents.

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

	15.	 	NOTICES AND OTHER MATTERS

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

	 	(a)	 	be in writing delivered personally or by first-class prepaid letter (airmail if
available), or shall be served through a process server or subject to Clause 10.7 by
fax;
	 
	 	(b)	 	be deemed to have been received, subject as otherwise provided in this
Agreement or the relevant Security Document, in the case of a telex, at the time of
despatch with confirmed answerback of the addressee appearing at the beginning and end
of the communication, in the case of fax, at the time of dispatch as per transmission
report (provided in either case that if the date of despatch is not a business day in
the country of the addressee it shall be deemed to have been received at the opening of
business on the next such business day), and in the case of a letter when delivered or
served personally or five (5) days after it has been put into the post; and
	 
	 	(c)	 	be sent:

	 	(i)	 	if to be sent to any Security Party, to:
	 
	 	 	 	c/o NewLead Bulkers S.A.,

83 Akti Miaouli and Flessa Street,

185 38 Piraeus, Greece,

Fax No.: +30 213 014 8209

Attention: Chief Financial Officer
	 
	 	(ii)	 	in the case of the Bank at:
	 
	 	 	 	FBB-First Business Bank S.A.

62, Notara and Sotiros Dios streets,

69

 

	 		 	185 35 Piraeus, Greece

Fax No. (+30 210) 4132 058

Attention: The Manager

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

	15.2	 	Confidentiality

	 	(a)	 	Each of the parties hereto agrees and undertakes to keep confidential any
documentation and any confidential information concerning the business, affairs,
directors or employees of the other which comes into its possession during this
Agreement and not to use any such documentation, information for any purpose other than
for which it was provided.
	 
	 	(b)	 	The Borrower acknowledges and accepts that the Bank may be required by law,
regulation or regulatory requirement or any request of any central bank or any court
order to disclose information and deliver documentation relating to the Borrower and
the transactions and matters in relation to this Agreement and/or the other Security
Documents to governmental or regulatory agencies and authorities.
	 
	 	(c)	 	The Borrower acknowledges and accepts that in case of occurrence of any of the
Events of Default the Bank may disclose information and deliver documentation relating
to the Borrower and the transactions and matters in relation to this Agreement and/or
the other Security Documents to third parties to the extent that this is necessary for
the enforcement or the contemplation of enforcement of the Bank’s rights or for any
other purpose for which in the opinion of the Bank, such disclosure would be useful or
appropriate for the interests of the Bank or otherwise and the Borrower expressly
authorises any such disclosure and delivery.
	 
	 	(d)	 	The Borrower acknowledges and accepts that the Bank may be prohibited to
disclosing information to the Borrower by reason of law or duties of confidentiality
owed or to be owed to other persons.

70

 

	16.	 	APPLICABLE LAW AND JURISDICTION

	16.1	 	Law:

	 	(a)	 	This Agreement shall be governed by and construed in accordance with English
Law.
	 
	 	(b)	 	For the purposes of enforcement in Greece, it is hereby expressly agreed that
English law as the governing law of the Loan Agreement will be proved by an affidavit
of a solicitor from an English law firm to be appointed by the Bank and the said
affidavit shall constitute full and conclusive evidence binding on the Borrower but the
Borrower shall be allowed to rebut such evidence save for witness.

	16.2	 	Submission to Jurisdiction

	 	(a)	 	For the exclusive benefit of the Bank, the Borrower agrees that any legal
action or proceedings arising out or in connection with this Agreement against the
Borrower or any of its assets may be brought in the English Courts. The Borrower
irrevocably and unconditionally submits to the jurisdiction of such courts and
irrevocably designates, appoints and empowers Messrs. Cheeswrights, Notaries
Public, at their office for the time being at Bankside House, 107 Leadenhall
Street, London EC3A 4HA, England, to receive for it and on its behalf, service of
process issued out of the English courts in any such legal action or proceedings,
provided, however, that the Borrower further agrees that in the event that (i)
Messrs. Cheeswrights, Notaries Public, close or fail to maintain a business
presence in England, or (ii) the Bank, in its sole discretion, shall determine that
service of process on the said agents is not feasible or may be insufficient under the
Laws of England, then any summons, writ or other legal process issued against them in
England may be served upon Messrs. The Law Debenture Corporate Services Limited, Fifth
Floor, 100 Wood Street, London EC2V 7EX, England (hereinafter called the “Process Agent
for English Proceedings”), or their successors, who are hereby authorised to accept
such service, which shall be deemed to be good service on the Borrower. The Borrower
hereby irrevocably agrees to maintain a Process Agent for English Proceedings
throughout the Security Period and hereby agrees that in the event that (aa) Messrs.
The Law Debenture Corporate Services Limited close or fail to maintain a business
presence in England, or (bb) the Bank in its sole discretion, shall determine that
service of process on Messrs. The Law Debenture Corporate Services Limited is not
feasible or may be insufficient under the

71

 

	 	 	 	Laws of England, then the Borrower, within
five (5) days after written notice from the Bank, shall appoint a substitute Process
Agent for English Proceedings acceptable to the Bank and if the Borrower fails to make
such appointment within the said five days period, the Bank may appoint such substitute
Process
Agent for English Proceedings and the Bank is hereby irrevocably authorised to
effect such appointment on Borrower’s behalf. The appointment of the Process Agent
for English Proceedings shall be valid and binding from the date notice of such
appointment is given by the Bank to the Borrower in accordance with Clause 15.1.
The foregoing shall not limit the right of the Bank to start proceedings in any
other country or to serve process in any other manner permitted by law. Finally, the
Borrower hereby waives any objections to the inconvenience of England as a forum.

	 	(a)	 	The submission to the jurisdiction of the English Courts shall not (and shall
not be construed so as to) limit the right of the Bank to take proceedings against the
Borrower in the courts of any other competent jurisdiction nor shall the taking of
proceedings in any one or more jurisdictions preclude the taking of proceedings in any
other jurisdiction, whether concurrently or not.
	 
	 	(b)	 	The parties further agree that subject to Clause 16.2(b) the Courts of England
shall have exclusive jurisdiction to determine any claim which the Borrower may have
against the Bank arising out of or in connection with this Agreement and the Borrower
hereby waives any objections to proceedings with respect to this Agreement in such
courts on the grounds of venue or inconvenient forum.

	16.3	 	Proceedings in any other country:

	 	(a)	 	Clause 16.2 is for the exclusive benefit of the Bank which reserves the rights:

	 	(i)	 	to commence proceedings in relation to any matter which arises
out of or in connection with this Agreement in the courts of any country other
than England and which have or claim jurisdiction to that matter; and
	 
	 	(ii)	 	to commence such proceedings in the courts of any such country
or countries concurrently with or in addition to proceedings in England or
without commencing proceedings in England.

	 	(b)	 	If it is decided by the Bank that any such proceedings should be commenced in
any other country, then any objections as to the jurisdiction or any claim as to the
inconvenience of the forum is hereby waived by the Borrower and it is agreed and
undertaken by the Borrower to instruct lawyers in that country to 

72

 

	 	 	 	accept service of
legal process and not to contest the validity of such proceedings as far as the
jurisdiction of the court or courts involved is concerned and the Borrower agrees that
any judgment or order obtained in
an English court shall be conclusive and binding on the Borrower and shall be
enforceable without review in the courts of any other jurisdiction.

	16.4	 	Process Agent: Mr. George Livanos, an Attorney-at-Law, presently of 83 Akti Miaouli
and Flessa street, GR 18535 Piraeus, Greece, is hereby appointed by the Borrower as agent to
accept service (hereinafter “Process Agent”) upon whom any judicial process in respect of
proceedings in Greece (including but without limitation any documents initiating legal
proceedings) may be served and any notice, request, demand or other communication under this
Agreement or any of the Security Documents. In the event that the Process Agent (or any
substitute process agent notified to the Bank in accordance with the foregoing) cannot be
found at the address specified above (or, as the case may be, notified to the Bank), which
will be conclusively proved by a deed of a process server to the effect that the Process Agent
was not found at such address, the Bank shall have the right to serve the documents either on
the Process Agent at such address or at any address where the Process Agent may be found or in
accordance with the procedure provided by the relevant provisions on service of process
provided by the Hellenic Procedural Code.

	16.5	 	Meaning of “proceedings”: In this Clause 16 “proceedings” means proceedings of any kind,
including an application for a provisional or protective measure.

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

73

 

SCHEDULE 1

FORM OF DRAWDOWN NOTICE

(referred to in Clause 2.3)

	To: 	 	FBB-First Business Bank S.A.

62, Notara and Sotiros Dios streets,

185 35 Piraeus, Greece

(the “Bank”)

[l], 2010

	Re: 	 	Term loan facility of up to US$24,150,000 — Loan Agreement dated [l]
2010 made between (A) Grand Spartounta Inc. (the “Borrower”) and (B)
the Bank (the “Loan Agreement”).

We refer to the Loan Agreement and hereby give you notice that we wish to borrow as follows:

	(a)	 	the amount of ($[l]) (Dollars [l] million) in respect of the Commitment;
	 
	(b)	 	Drawdown Date: [l], [l];
	 
	(c)	 	duration of the Interest Period in respect of the Loan shall be [l] months/shall
terminate on [l]; and
	 
	(d)	 	Payment instructions: The funds should be credited/remitted to ([l][l] [name and
number of account] [l]) with [l], New York, USA.

We confirm that:

	(a)	 	no event or circumstance has occurred and is continuing which constitutes a Default;
	 
	(b)	 	the representations and warranties contained in Clause 6 of the Loan Agreement and the
representations and warranties contained in each of the other Security Documents 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 drawing of the Commitment 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

74

 

	(d)	 	to the best of our knowledge and belief there has been no material adverse change in our
financial position or in the consolidated financial position of ourselves and the other
Security Parties 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 when used herein.

	 	 	 	 	 

	SIGNED by

	 	 	)	 
	Mr.

	 	 	)	 
	for and on behalf of

	 	 	)	 
	GRAND SPARTOUNTA INC.,

	 	 	)	 
	of Marshall Islands, in the presence of:

	 	 	)	 

	 	 	 	 	 
	 	 	 
	Witness:  	 	 	 
	 	Name:  	Efstratios Kalantzis 	 	 
	 	Address: 	13 Defteras Merarchias Street

Piraeus, Greece
	 	 
	 	Occupation: 	Attorney-at-law 	 	 

75

 

	 	 	 	 	 

SCHEDULE 2

Form of Compliance Certificate

	To: 	 	FBB-First Business Bank S.A.

(the “Bank”)
	 
	From: 	 	NewLead Holdings Ltd.

Date [            ] 20[    ]

	Re: 	 	Term loan facility of up to US$24,150,000 — Loan Agreement dated
[l] 2010 made between (A) Grand Spartounta Inc. (the
“Borrower”) and (B) the Bank (the “Loan Agreement”).

Dear Sirs

We refer to the Loan Agreement. Words and expressions whose meanings are defined in the Loan
Agreement shall have the same meanings when used herein.

We hereby confirm that [except as stated below] as at the date hereof to the best of our knowledge
and belief after due inquiry:-

	1.	 	all the Borrower’s undertakings in the Loan Agreement set out in clause 8.6 are being fully
complied with and, in particular, by reference to the latest [audited][unaudited] financial
statements, management accounts and all other current relevant information available to us on
a consolidated basis:

	 	i)	 	the amount maintained as at the date hereof in accounts held in the names
of the Borrower and/or the Newlead Corporate Guarantor or any of them with the Bank
(which bank accounts include the Earnings Account but exclude any other accounts of
the Borrower and the Newlead Corporate Guarantor or any of them with the Bank which
are subject to an Encumbrance), as cash balances is $[•], which is at least equal 5%
of the Group’s total Indebtedness as at the relevant time;
	 
	 	ii)	 	the market value adjusted net worth of the Group is [l]; and
	 
	 	iii)	 	the ratio of market value adjusted Total Assets to Total Liabilities of the
Group is [l]:

	2.	 	no Default has occurred;

76

 

	3.	 	appendix 1 hereto contains a comprehensive list of all Group Members as at the date hereof
and the jurisdictions in which they are incorporated and an up-to-date corporate structure
chart for the Group;
	 
	4.	 	the representations set out in clause 6 of the Loan Agreement are true and accurate with
reference to all facts and circumstances now existing and all required authorisations have
been obtained and are in full force and effect; and

[State any exceptions/qualifications to the above statements]

[Attach list of current Group Members and current corporate structure chart]

Yours faithfully,

NEWLEAD HOLDINGS LTD.

	 	 	 	 	 	 	 	 	 	 	 	 	 

	By

	 	 	 	 	 	 	 	By	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	 	 	 	 	 	 	Name:	 	 
	 	 	[Chief Financial Officer]	 	 	 	 	 	Director :	 	 
	 	 	[Director :]	 	 	 	 	 	 	 	 

77

 

EXECUTION PAGE

	 	 	 	 	 	 	 

	SIGNED

	 	 	)	 	 	 
	for and on behalf of

	 	 	)	 	 	 
	GRAND SPARTOUNTA INC.,

	 	 	)	 	 	 
	of Marshall Islands,

	 	 	)	 	 	 
	by Mr. Michail Livanos

	 	 	)	 	 	 
	its duly authorised Attorney-in-fact

	 	 	)	 	 	/s/ Michail Livanos
	in the presence of:

	 	 	)	 	 	Attorney-in-Fact

	 	 	 	 	 
	 	 	 
	Witness:  	/s/ Efstratios Kalantzis
 	 	 
	 	Name:  	Efstratios Kalantzis 	 	 
	 	Address:   	13 Defteras Merarchias Street

Piraeus, Greece	 	 
	 	Occupation: 	Attorney-at-law 	 	 
	 

	 	 	 	 	 	 	 

	SIGNED

	 	 	)	 	 	 
	for and on behalf of

	 	 	)	 	 	 
	FBB-FIRST BUSINESS BANK S.A.

	 	 	)	 	 	 
	by Mr. Nikolaos Vougioukas

	 	 	)	 	 	 
	its duly authorised Attorney-in-fact

	 	 	)	 	 	/s/ Nikolaos Vougioukas
	in the presence of:

	 	 	)	 	 	Attorney-in-Fact

	 	 	 	 	 
	 	 	 
	Witness:  	/s/ Efstratios Kalantzis
 	 	 
	 	Name:  	Efstratios Kalantzis 	 	 
	 	Address:   	13 Defteras Merarchias Street

Piraeus, Greece

	 	 
	 	Occupation: 	Attorney-at-law 	 	 
	 

78exv10w2

Exhibit 10.2

Private & confidential

Dated: 29th November, 2006

EMPORIKI BANK OF GREECE S.A.

- and -

GRAND MARKELA INC.

 

 

LOAN AGREEMENT NO. 164/2006

for a secured floating interest rate

multi-currency loan facility

of up to US$14,750,000

 

 

(J18-181758/C)

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	CLAUSE	 	HEADINGS	 	PAGE
	 
	1.	 	PURPOSE, DEFINITIONS AND INTERPRETATION
	 	1
	 
	2.	 	THE LOAN
	 	11
	 
	3.	 	INTEREST
	 	14
	 
	4.	 	REPAYMENT — PREPAYMENT
	 	17
	 
	5.	 	PAYMENTS, TAXES, LOAN ACCOUNT AND COMPUTATION
	 	20
	 
	6.	 	REPRESENTATIONS AND WARRANTIES
	 	21
	 
	7.	 	CONDITIONS PRECEDENT
	 	26
	 
	8.	 	COVENANTS
	 	29
	 
	9.	 	EVENTS OF DEFAULT
	 	36
	 
	10.	 	INDEMNITIES — EXPENSES — FEES
	 	42
	 
	11.	 	SECURITY, APPLICATION, SET-OFF AND ACCOUNTS
	 	45
	 
	12.	 	UNLAWFULNESS, INCREASED COSTS
	 	49
	 
	13.	 	ASSIGNMENT, PARTICIPATION, LENDING BRANCH
	 	50
	 
	14.	 	MISCELLANEOUS
	 	51
	 
	15.	 	NOTICES AND OTHER MATTERS
	 	53
	 
	16.	 	APPLICABLE LAW AND JURISDICTION
	 	55
	 	 	 
	 	 
	 	 	SCHEDULES
	 	 
	 
	1.	 	FORM OF DRAWDOWN NOTICE
	 	58
	 
	2.	 	INSURANCES
	 	59

 

 

THIS AGREEMENT is dated the 29th day of November, 2006 made BETWEEN:

	(1)	 	EMPORIKI BANK OF GREECE S.A., a Greek banking societe anonyme duly incorporated under the
laws of Greece, having its registered office at 11, Sofokleous Street, Athens, Greece, acting
for the purposes of this Agreement through its office at 114 Kolokotroni Street, Piraeus,
Greece, as lender (the “Bank”, which expression includes its successors and assignees); and
	 
	(2)	 	GRAND MARKELA INC., a company organised and existing under the laws of the Republic of
Liberia and having its registered office at 80 Broad Street, Monrovia, Liberia (hereinafter
called the “Borrower”, which expression includes its successors in title)

AND IT IS HEREBY AGREED as follows:

	1.	 	PURPOSE, DEFINITIONS AND INTERPRETATION
	 
	1.1	 	Amount and Purpose
	 
	 	 	This Agreement sets out the terms and conditions upon and subject to which the Bank agrees
to make available to the Borrower a term loan facility of up to Fourteen million seven
hundred fifty thousand Dollars ($14,750,000) or the equivalent thereof in an Optional
Currency i.e. 72% of the Market Value of the Vessel, to be used for the purpose of financing
part (72%) of the acquisition cost of the Vessel.
	 
	1.2	 	Definitions
	 
	 	 	In this Agreement, unless the context otherwise requires each term or expression defined in
the recital of the parties and in this Clause shall have the meaning given to it in the
recital of the parties, in this Clause:
	 
	 	 	“Accounts Pledge Agreement” means an agreement to be entered into between the Borrower and
the Bank for the creation of a pledge over the Earnings Account and the Retention Account in
favour of the Bank, in form and substance satisfactory to the Bank as the same may from time
to time be amended and/or supplemented;
	 
	 	 	“Advance” means each borrowing of a portion of the Commitment by the Borrower or (as the
context may require) the principal amount of such borrowing;
	 
	 	 	“Agreed Rate” means a rate agreed between the Bank and the Borrower on the basis of which
(instead of LIBOR) the interest rate is determined pursuant to Clause 3.6;
	 
	 	 	“Approved Manager” means for the time being Newfront Shipping S.A., a corporation organised
and existing under the laws of the Republic of Panama and having its registered office in
Panama City, Panama and a branch office established in Greece (at 69 Akti Miaouli, 185 37
Piraeus, Greece) pursuant to the Greek laws 89/67, 378/68, 27/75 and 814/79 (as amended) or
any other person appointed by the Borrower, with the written consent of the Bank (such
consent not to be unreasonably withheld), as the Approved Manager of the Vessel, and
includes its successors in title;
	 
	 	 	“Availability Period” means the period starting on the date hereof and ending on the
30th day of November, 2006 or until such later date as the Bank may agree in
writing or on such earlier date (if any): (i) on which the whole Commitment has been
advanced by the Bank to the Borrower, or (ii) on which the Commitment is reduced to zero
pursuant to Clauses 3.6, 9.9, 12.1 or 12.2 or any other Clause of this Agreement;
	 
	 	 	“Balloon Instalment” means the principal part of the Loan amounting to $3,950,000 (Three
million nine hundred fifty thousand Dollars);

1

 

	 	 	“Bank” means the Bank as specified in the beginning of this Agreement and includes its
successors in title and transferees;
	 
	 	 	“Banking Day” means any day on which banks and foreign exchange markets in New York, London,
Pireaus and Athens and in each country or place in or at which an act is required to be done
under this Agreement in accordance with the usual practice of the Bank, are open for the
transaction of business of the nature contemplated in this Agreement;
	 
	 	 	“Bank’s Spot Rate of Exchange” means in relation to the conversion of one currency (the
“first currency”) into another (the “second currency”) the spot rate of exchange offered by
the Bank (as conclusively certified by it on the day of the offer) for the purchase of the
second currency against delivery/payment of the first currency;
	 
	 	 	“Borrowed Money” means Indebtedness incurred in respect of (i) money borrowed or raised,
(ii) any bond, note, loan stock, debenture or similar instrument, (iii) acceptance of
documentary credit facilities, (iv) deferred payments for assets or services acquired, (v)
rental payments under leases (whether in respect of land, machinery, equipment or otherwise)
entered into primarily as a method of raising finance or of financing the acquisition of the
asset leased, (vi) guarantees, bonds, stand-by letters of credit or other instruments issued
in connection with the performance of contracts and (vii) guarantees or other assurances
against financial loss in respect of Indebtedness of any person falling within any of
sub-paragraphs (i) to (vi) above;
	 
	 	 	“Borrower” means the Borrower as specified in the beginning of this Agreement;
	 
	 	 	“Charterparty” means in relation to the Vessel, the time charter dated 29th May,
2006, entered into between the Seller, as owner and C Transport Panamax Ltd., of Isle of Man
(the “Charterer”), as charterer for the time charter of the Vessel as amended by an
addendum thereto made or to be made between the Seller, the Charterer and the Borrower, such
Charterparty entered into pursuant to a Pool Agreement dated 5th July,
1999 and any amendment or supplement thereto, and, after the termination of such time
charter, any time charter or contract of affreightment, agreement or related document in
respect of the employment of the Vessel whether now existing or hereinafter entered into by
the Borrower, as owner and any charterer for a period for more than 12 months (and shall
include any addenda thereto);
	 
	 	 	“Charterparty Assignment” means the assignment of the Charterparty and after the termination
thereof the assignment of any Charterparty, each to be executed by the Borrower in favour of
the Bank and the acknowledgement of notice of the assignment in respect of the Charterparty
to be given by the relevant charterer, all in form and substance satisfactory to the Bank as
the same may from time to time be amended and/or supplemented;
	 
	 	 	“Commitment” means the amount which the Bank has agreed to lend to the Borrower under Clause
2.1 as reduced pursuant to any relevant term of this Agreement;
	 
	 	 	“Commitment Letter” means the Commitment Letter dated 4th September, 2006
addressed by the Bank to the Personal Guarantor and shall include any amendments or addenda
thereto;
	 
	 	 	“Corporate Guarantee” means an irrevocable and unconditional guarantee given or, as the
context may require, to be given by the Corporate Guarantor in form and substance
satisfactory to the Bank as a security for the Outstanding Indebtedness and any and all
other obligations of the Borrower under this Agreement;

2

 

	 	 	“Corporate Guarantor” means Grandunion Inc., of Marshall Islands, and/or any other person
nominated by the Borrower and acceptable to the Bank which gave or as the context may
require, may give a Corporate Guarantee;
	 
	 	 	“Default” means any Event of Default or any event 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;
	 
	 	 	“Default Rate” means that rate of interest per annum which is determined in accordance with
the provisions of Clause 3.4;
	 
	 	 	“DOC” means a document of compliance issued to an Operator in accordance with rule 13 of the
ISM Code;
	 
	 	 	“Dollars” and “$” mean the lawful currency of the United States of America and in respect of
all payments to be made under any of the Security Documents means funds which are for same
day settlement in the New York Clearing House Interbank Payments System (or such other U.S.
dollar funds as may at the relevant time be customary for the settlement of international
banking transactions denominated in Dollars);
	 
	 	 	“Dollar Amount” means, in relation to the Loan, the amount in Dollars which would have been
outstanding had the Loan been drawn down in, and remained outstanding at all times in,
Dollars, as reduced by any repayment, prepayment or cancellation under this Agreement and so
that the amount of any such reduction to be made as a result of any prepayment hereunder,
which prepayment was made in a currency other than Dollars shall be the Equivalent Amount in
Dollars, as at the date of prepayment of the amount prepaid;
	 
	 	 	“Drawdown Date” means the day, being a Banking Day, on which the Commitment is or, as the
context may require, shall be advanced to the Borrower;
	 
	 	 	“Drawdown Notice” means a notice substantially in the terms of Schedule 1;
	 
	 	 	“Earnings” in relation to the Vessel, means all earnings of the Vessel, both present or
future, including all freight, hire and passage moneys, compensation payable to the Owner in
the event of requisition of the Vessel for hire, remuneration for salvage and towage
services, demurrage and detention moneys, contributions of any nature whatsoever in respect
of general average, damages for breach (or payments for variation or termination) of any
charterparty or other contract for the employment of the Vessel and any other earnings
whatsoever due or to become due to the Owner in respect of the Vessel and all sums
recoverable under the Insurances in respect of loss of Earnings and includes, if and
whenever the Vessel is employed on terms whereby any and all such moneys as aforesaid are
pooled or shared with any other person, that proportion of the net receipts of the relevant
pooling or sharing agreement which is attributable to the Vessel;
	 
	 	 	“Earnings Account” means the account to be opened and maintained with the Lending Branch or
with any other Branch of the Bank or with any other bank the Bank may designate to the
Borrower at the discretion of the Bank, to which (inter alia) all Earnings of the Vessel are
to be paid in accordance with the provisions of this Agreement;
	 
	 	 	“Encumbrance” means any mortgage, charge (whether fixed or floating), pledge, lien,
hypothecation, assignment, security interest, title retention, arrest, seizure, garnishee
order (whether nisi or absolute) or any other order or judgement having similar effect or
other encumbrance of any kind securing or any right conferring a priority of payment in
respect of any obligation of any person;

3

 

	 	 	“Environmental Affiliate” means any agent or employee of the Borrower or any other Relevant
Party or any person having a contractual relationship with the Borrower or any other
Relevant Party in connection with any Relevant Ship or her operation or the carriage of
cargo thereon;
	 
	 	 	“Environmental Approval” means any consent, authorisation, licence or approval of any
governmental or public body or authorities or courts applicable to any Relevant Ship or her
operation or the carriage of cargo thereon and/or passengers therein and/or provisions of
goods and/or services on or from the Relevant Ship required under any Environmental Law;
	 
	 	 	“Environmental Claim” means any and all enforcement, clean up, removal or other governmental
or regulatory actions or orders instituted or completed pursuant to any Environmental Law or
any Environmental Approval together with claims made by any third party relating to damage,
contribution, loss or injury, resulting from any actual or threatened emission, spill,
release or discharge of a Material of Environmental Concern from any Relevant Ship;
	 
	 	 	“Environmental Laws” means all national, international and state laws, rules, regulations,
treaties and conventions applicable to any Relevant Ship pertaining to the pollution or
protection of human health or the environment including, without limitation, the carriage or
Materials of Environmental Concern and actual or threatened emissions, spills, releases or
discharges of Materials of Environmental Concern and actual or threatened emissions, spills,
releases or discharges of Materials of Environmental Concern from any Relevant Ship;
	 
	 	 	“Equivalent Amount” means the equivalent in one currency of an amount in another currency as
computed at the Bank’s Spot Rate of Exchange on the second Banking Day before the date on
which the Equivalent Amount of the relevant sum falls to be determined;
	 
	 	 	“Euro” and the sign “€” means the lawful money of the European Monetary Union as more
particularly described in the Treaty and the Council Regulation 235/97 as amended from 1
January, 1999 by 1103/1997 and 974/1998 and the relevant European Community and national
legislation and in respect of all payments to be made under this Agreement in Euro means
immediately available, freely transferable funds;
	 
	 	 	“Event of Default” means any event or circumstance set out in Clause 9 or described as such
in any other of the Security Documents;
	 
	 	 	“Expenses” means the aggregate at any relevant time (to the extent that the same have not
been received or recovered by the Bank) of:

	 	(a)	 	all losses, liabilities, costs, charges, expenses, damages and outgoings of
whatever nature, (including, without limitation, Taxes, repair costs, registration fees
and insurance premiums, crew wages, repatriation expenses and seamen’s pension fund
dues) suffered, incurred, charged to or paid or committed to be paid by the Bank in
connection with the exercise of the powers referred to in or granted by any of the
Security Documents or otherwise payable by the Borrower in accordance with the terms of
any of the Security Documents;
	 
	 	(b)	 	the expenses referred to in Clause 10.2 (a) and (b); and
	 
	 	(c)	 	interest on all such losses, liabilities, costs, charges, expenses, damages and
outgoings from, in the case of Expenses referred to in sub-paragraph (b) above, the
date on which such Expenses were demanded by the Bank from the Borrower and in all
other cases, the date on which the same were suffered,

4

 

	 	 	 	incurred or paid by the Bank until the date of receipt or recovery thereof (whether
before or after judgement) at the Default Rate (as conclusively certified by the
Bank);

	 	 	“Final Maturity Date” means the date falling six (6) years after the Drawdown Date;
	 
	 	 	“Flag State” means the Republic of Liberia or such other state or territory proposed in
writing by the Borrower to the Bank and approved (at its sole discretion) by the Bank, as
being the Flag State of the Vessel for the purposes of the Security Documents;
	 
	 	 	“General Assignment” means the assignment of the Earnings, Insurances and Requisition
compensation collateral to the Mortgage executed or (as the context may require) to be
executed by the Borrower in favour of the Bank in form satisfactory to the Bank;
	 
	 	 	“Governmental Withholdings” means withholdings and any restrictions or conditions resulting
in any charge whatsoever imposed, either now or hereafter, by any sovereign state or by any
political sub-division or taxing authority of any sovereign state;
	 
	 	 	“Group” means together the Borrower, the Approved Manager, the Corporate Guarantor, any
Subsidiary of any thereof and each company whose vessel is managed by the Approved Manager
and “member of the Group” shall be construed accordingly;
	 
	 	 	“Guarantees” means together the Corporate Guarantee and the Personal Guarantee and
“Guarantee” means any of them;
	 
	 	 	“Guarantors” means together the Corporate Guarantor and the Personal Guarantor and
“Guarantor” means either of them;
	 
	 	 	“Indebtedness” means any obligation for the payment or repayment of money, whether as
principal or as surety, whether present or future, actual or contingent;
	 
	 	 	“Insurances” includes all policies and contracts of insurance (which expression includes all
entries of the Vessel in a protection and indemnity or war risks association) which are from
time to time taken out or entered into in respect of the Vessel and her Earnings or
otherwise howsoever in connection with the Vessel;
	 
	 	 	“Interest Payment Date” means in respect of the Loan or any part thereof in respect of which
a separate Interest Period is fixed the last day of the relevant Interest Period and in case
of any Interest Period longer than three (3) months the date(s) falling at successive three
(3) monthly intervals during such longer Interest Period and the last day of such Interest
Period;
	 
	 	 	“Interest Period” means in relation to the Loan or any part thereof, each period for the
calculation of interest in respect of the Loan or such part ascertained in accordance with
Clauses 3.2 and 3.3;
	 
	 	 	“ISM Code” means in relation to its application to the Borrower, the Vessel and her
operation:

	 	(a)	 	“The International Management Code for the Safe Operation of Ships and for
Pollution Prevention”, currently known or referred to as the “ISM Code”, adopted by the
Assembly of the International Maritime Organisation by Resolution A. 741(18) on
4th November, 1993 and incorporated on 19th May,

5

 

	 		 	1994 into chapter IX of the International Convention for the Safety of Life at Sea
1974 (SOLAS 1974); and
	 
	 	(b)	 	all further resolutions, circulars, codes, guidelines, regulations and
recommendations which are now or in the future issued by or on behalf of the
International Maritime Organisation or any other entity with responsibility for
implementing the ISM Code, including without limitation, the “Guidelines on
implementation or administering of the International Safety Management (ISM) Code by
Administrations” produced by the International Maritime Organisation pursuant to
Resolution A. 788(19) adopted on 25th November, 1995;

	 	 	as the same may be amended, supplemented or replaced from time to time;
	 
	 	 	“ISM Code Documentation” includes:

	 	(a)	 	the DOC and SMC issued by a classification society in all respects acceptable
to the Bank in its absolute discretion pursuant to the ISM Code in relation to the
Vessel within the period specified by the ISM Code;
	 
	 	(b)	 	all other documents and data which are relevant to the ISM SMS and its
implementation and verification which the Bank may require by request; and
	 
	 	(c)	 	any other documents which are prepared or which are otherwise relevant to
establish and maintain the Vessel’s or the Borrower’s compliance with the ISM Code
which the Bank may require by request;

	 	 	“ISM SMS” means the safety management system which is required to be developed, implemented
and maintained under the ISM Code;
	 
	 	 	“ISPS Code” means the International Ship and Port Security Code of the International
Maritime Organization and includes any amendments or extensions thereto and any regulation
issued pursuant thereto;
	 
	 	 	“ISSC” means an International Ship Security Certificate issued in respect of the Vessel
pursuant to the ISPS Code;
	 
	 	 	“Japanese Yen” and the sign “¥” means the lawful currency of Japan and in respect of all
payments to be made under this Agreement in Japanese Yen means immediately available, freely
transferable funds;
	 
	 	 	“LIBOR” means, in relation to a particular period, the rate for deposits of the relevant
Optional Currency for a period equivalent to such period at or about 11:00 a.m. (London
time) on the second Banking Day before the first day of such period as displayed on Telerate
page 3750 (British Bankers’ Association Interest Settlement Rates) (or such other page as
may replace such page 3750 on such system or on any other system of the information vendor
for the time being designated by the British Bankers’ Association to calculate BBA Interest
Settlement Rate (as defined in the British Bankers’ Recommended Terms and Conditions
(“BBAIRS” terms) dated August, 1985)), provided that if on such date no such rate is
so displayed, LIBOR for such period shall be the rate per annum (rounded upward if necessary
to the nearest one sixteenth of one percent) at which the Bank is able in accordance with
its usual practices to obtain deposits in Optional Currency in an amount approximately equal
to the amount in relation to which LIBOR is to be determined for a period equivalent to such
period in the London Interbank Market at or about 11:00 a.m. (London time) on the second
Banking Day before the first day of such period;

6

 

	 	 	“Loan” means the aggregate principal amount borrowed by the Borrower in respect of the
Commitment or (as the context may require) the principal amount thereof owing to the Bank
under this Agreement at any relevant time;
	 
	 	 	“Lending Branch” means the office of the Bank appearing at the beginning of this Agreement
or any other office of the Bank designated by the Bank as the Lending Branch by notice to
the Borrower;
	 
	 	 	“Major Casualty Amount” means any casualty to the Vessel in respect whereof the claim or the
aggregate of the claims against all insurers, before adjustment for any relevant franchise
or deductible, exceeds five hundred thousand Dollars ($500,000) or the equivalent in any
other currency;
	 
	 	 	“Management Agreement” means the agreement made between the Borrower and the Approved
Manager providing (inter alia) for the Approved Manager to manage the Vessel;
	 
	 	 	“Manager’s Undertaking” means a letter of undertaking and subordination to be executed by
the Approved Manager, as manager, whereby the Approved Manager shall subordinate any and all
claims it may have against the Borrower and/or the Vessel to the claims of the Bank
hereunder and under the Security Documents;
	 
	 	 	“Margin” means one point forty percent (1.40%) per annum;
	 
	 	 	“Market Value” means the market value of the Vessel as determined in accordance with Clause
8.5(b);
	 
	 	 	“Material of Environmental Concern” 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 1988;
	 
	 	 	“Month” means a period beginning in one calendar month and ending in the next calendar month
on the day numerically corresponding to the day of the calendar month on which it started
provided that (i) if there is no such numerically corresponding day, it shall end on
the last Banking Day in such next calendar month and (ii) if such numerically corresponding
day is not a Banking Day, the period shall end on the next following Banking Day in the same
calendar month but if there is no such Banking Day it shall end on the preceding Banking Day
and “months” and “monthly” shall be construed accordingly;
	 
	 	 	“Mortgage” means the first preferred ship mortgage on the Vessel to be executed by the
Borrower in favour of the Bank in form and substance satisfactory to the Bank;
	 
	 	 	“Mortgaged Vessel(s)” means the Vessel and any other vessel which is or remain mortgaged in
favour of the Bank pursuant to this Agreement at any relevant time hereunder;
	 
	 	 	“Operator” means any person who is from time to time during the Security Period concerned in
the operation of the Vessel and falls within the definition of “Company” set out in rule
1.1.2. of the ISM Code;
	 
	 	 	“Operating Expenses” in relation to the Vessel means the expenses for crewing, victualling,
insuring, maintenance (including dry-docking and special survey cost and expenses), spares,
management and operation of the Vessel which are reasonably incurred for a vessel of the
size and type of the Vessel;

7

 

	 	 	“Optional Currency” means Dollars, Euro, Swiss Francs and Japanese Yen (or such of the
foregoing) as are freely transferable and convertible into other currencies and are
available to the Bank in the relevant amount in the normal course of business in the London
Interbank Market;
	 
	 	 	“Outstanding Indebtedness” means the aggregate of the Loan and interest accrued and accruing
thereon, the Expenses and all other sums of money from time to time owing by the Borrower to
the Bank, including, without limitation, default interest, damages, indemnities, costs,
expenses and any exposure from currency fluctuations pursuant to Clause 2.9, whether
actually or contingently, presently or in the future, under this Agreement and the other
Security Documents;
	 
	 	 	“Owner” means the Borrower;
	 
	 	 	“Permitted Encumbrance” means any Encumbrance in favour of the Bank created pursuant to the
Security Documents and Permitted Liens;
	 
	 	 	“Permitted Lien” means any lien on the Vessel for master’s, officers’ or crew’s wages
outstanding in the ordinary course of trading, any lien for salvage and any ship repairer’s
or outfitter’s possessory lien for a sum not (except with the prior written consent of the
Bank) exceeding the Major Casualty Amount;
	 
	 	 	“Personal Guarantee” means the irrevocable and unconditional guarantee given or, as the
context may require, to be given by the Personal Guarantor in form and substance
satisfactory to the Bank as security for the Outstanding Indebtedness and any and all other
obligations of the Borrower under this Agreement;
	 
	 	 	“Personal Guarantor” means the person nominated by the Borrower and acceptable to the Bank
which gave or, as the context may require, shall or may give a Personal Guarantee, which
Personal Guarantee may, at the request of the Borrower, be released at the sole discretion
of the Bank, subject to compliance with financial covenants of the Corporate Guarantor to be
mutually agreed between the Bank and the Borrower;
	 
	 	 	“Pledgor(s)” means person(s) acceptable to the Bank who has/have executed or (as the context
may require) shall execute the Shares Pledge Agreement;
	 
	 	 	“Registry” means the offices of such registrar, commissioner or representative of the Flag
State who is duly authorised to register the Vessel, the Borrower’s title to the Vessel and
the Mortgage over the Vessel under the laws and flag of the Flag State;
	 
	 	 	“Related Company” means any company which is under the ultimate control, direct or indirect,
of any individual who has ultimate control, whether alone or with others, of the Borrower or
other entity of which such company is a Subsidiary and any Subsidiary of any such company or
entity;
	 
	 	 	“Relevant Jurisdiction” means any jurisdiction in which or where any Security Party is
incorporated, resident, domiciled, has a permanent establishment, carries on, or has a place
of business or is otherwise effectively connected;
	 
	 	 	“Repayment Date” means each of the dates specified in Clause 4.1 on which the Repayment
Instalments shall be payable by the Borrower to the Bank;
	 
	 	 	“Relevant Party” means the Borrower, the Borrower’s Related Companies and any other Security
Party and any Security Party’s Related Companies;
	 
	 	 	“Relevant Ship” means the Vessel 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;

8

 

	 	 	“Repayment Date” means each of the dates specified in Clause 4.1 on which the Repayment
Instalments shall be payable by the Borrower to the Bank;
	 
	 	 	“Repayment Instalment” means each instalment of the Loan which becomes due for repayment by
the Borrower to the Bank on a Repayment Date pursuant to Clause 4.1;
	 
	 	 	“Requisition Compensation” means all sums of money or other compensation from time to time
payable by reason of requisition of the Vessel otherwise than by requisition for hire;
	 
	 	 	“Retention Account” means an account of the Borrower with the Lending Branch or any other
branch of the Bank or any other bank as the Bank may at its discretion require;
	 
	 	 	“Security Documents” means this Agreement, the documents listed in Clause 11.1 and any and
every other document as may have been or shall from time to time after the date of this
Agreement be executed to guarantee and/or to secure the whole or any part of the Outstanding
Indebtedness and/or any and all other obligations of the Borrower to the Bank pursuant to
this Agreement (whether or not any such document also secures moneys from time to time owing
pursuant to any other document or agreement);
	 
	 	 	“Security Party” means the Borrower, the Guarantors, the Approved Manager and any other
person (other than the Bank) which is or may become a party to any of the Security
Documents;
	 
	 	 	“Security Period” means the period commencing on the date hereof and terminating on the date
upon which the Loan together with all interest thereon and all other moneys payable to the
Bank under this Agreement and the other Security Documents has been repaid in full to the
Bank;
	 
	 	 	“Security Requirement” means the amount in Dollars (as certified by the Bank, whose
certificate shall, in the absence of manifest error, be conclusive and binding on the
Borrower) which is at any relevant time One hundred and twenty five per cent (125%) of the
Outstanding Indebtedness;
	 
	 	 	“Security Value” means the amount in Dollars (as certified by the Bank whose certificate
shall, in the absence of manifest error, be conclusive and binding on the Borrower) which,
at any relevant time is the aggregate of (a) the Market Value of the Mortgaged Vessel(s) as
most recently determined in accordance with Clause 8.5 and (b) the market value of any
additional security provided under Clause 8.5 (c) (if any);
	 
	 	 	“Seller” means Santa Markela Ltd., of Liberia;
	 
	 	 	“Shares Pledge Agreement” means the pledge agreement to be executed by the Pledgors in
favour of the Bank whereby the Pledgors shall pledge all the issued share capital of the
Borrower, in form and substance satisfactory to the Bank as the same may from time to time
be amended and/or supplemented;
	 
	 	 	“SMC” means a safety management certificate issued in respect of the Vessel in accordance
with rule 13 of the ISM Code;
	 
	 	 	“Swiss Francs” and the sign “CHF” means the lawful currency of Switzerland and in respect of
all payments to be made under this Agreement in Swiss Francs means immediately available,
freely transferable funds;
	 
	 	 	“Subsidiary” of a person means any company or entity directly or indirectly controlled by
such person, and for this purpose “control” means either ownership of

9

 

	 	 	more than fifty percent (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;
	 
	 	 	“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 (except
taxes concerning the Bank and imposed on the net income of the Bank) and “Taxation” shall be
construed accordingly;
	 
	 	 	“Total Loss” in relation to the Vessel, means (a) actual, constructive, compromised or
arranged total loss of the Vessel; or (b) requisition for title or other compulsory
acquisition of the Vessel otherwise than by requisition for hire; or (c) hijacking, theft,
condemnation, capture, seizure, detention, arrest or confiscation of the Vessel by any
government or by any person acting or purporting to act on behalf of any government, unless
the Vessel is released and restored to the Borrower within thirty (30) days after the
occurrence thereof;
	 
	 	 	“Treaty” means the Treaty establishing the European Economic Community, being the Treaty of
Rome of 25th March, 1957 as amended by the single European Act 1986 and the
Maastricht Treaty (which was signed on 7th February, 1992 and came into force on
1st November, 1993) as amended, varied or supplemented from time to time; and
	 
	 	 	“Vessel” means the m/v “SANTA MARKELA” of approximately 38,022 gt and 24,121 nt, built in
1990 by Hitachi Zozen Corporation in Japan, presently registered under the laws and flag of
the Republic of Liberia with IMO Number 8811792 in the ownership of the Seller and which
upon acquisition by the Borrower shall be re-registered under the laws and flag of the
Republic of Liberia with the name “GRAND MARKELA”, and propelled by one oil internal
combustion engine of 7,770 KW together with all her boats, engines, machinery tackle outfit
spare gear fuel consumable and other stores belongings and appurtenances whether on board or
ashore and whether now owned or hereafter acquired and all the additions, improvements and
replacements in or on the above described vessel.
	 
	1.3	 	Interpretation
	 
	 	 	In this Agreement:

	 	(a)	 	clause headings and the table of contents are inserted for convenience of
reference only and shall be ignored in the interpretation of this Agreement;
	 
	 	(b)	 	subject to any specific provision of this Agreement or of any assignment and/or
participation or syndication agreement of any nature whatsoever, reference to each of
the parties hereto and to the other Security Documents shall be deemed to be reference
to and/or to include, as appropriate, their respective successors and permitted
assigns;
	 
	 	(c)	 	reference to a person shall be construed as including reference to an
individual, firm, company, corporation, unincorporated body of persons or any State or
any agency thereof;
	 
	 	(d)	 	where the context so admits, words in the singular include the plural and vice
versa;
	 
	 	(e)	 	the words “including” and “in particular” shall not be construed as limiting
the generality of any foregoing words;

10

 

	 	(f)	 	references to (or to any specified provisions of) this Agreement and all
documents referred to in this Agreement shall be construed as references to this
Agreement, that provision or that document as are in force for the time being and as
are amended and/or supplemented from time to time;
	 
	 	(g)	 	reference to this Agreement includes all the terms of this Agreement and any
Schedules, Annexes or Appendices to this Agreement, which form an integral part of
same;
	 
	 	(h)	 	reference to Clauses, sub-Clauses and Schedules are to Clauses, sub-Clauses and
Schedules in this Agreement;
	 
	 	(i)	 	reference to the opinion of the Bank or a determination or acceptance by the
Bank or to documents, acts, or persons acceptable or satisfactory to the Bank or the
like shall be construed as reference to opinion, determination, acceptance or
satisfaction of the Bank at the sole discretion of the Bank and such opinion,
determination, acceptance or satisfaction of the Bank shall be conclusive and binding
on the Borrower;
	 
	 	(j)	 	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;
	 
	 	(k)	 	references to any person include such person’s assignees and successors in
title;
	 
	 	(l)	 	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
	 
	 	(m)	 	references to any enactment shall be deemed to include references to such
enactment as re-enacted, amended or extended.

	2.	 	THE LOAN 
	 
	2.1	 	Commitment to Lend
	 
	 	 	The Bank, relying upon (inter alia) each of the representations and warranties set forth in
Clause 6 and in each of the other Security Documents, agrees to lend to the Borrower in one
(1) advance and upon and subject to the terms of this Agreement, the amount specified in
Clause 1.1 hereof.
	 
	2.2	 	Drawdown Notice and Commitment to Borrow
	 
	 	 	Subject to the terms and conditions of this Agreement, the Commitment shall be advanced to
the Borrower following receipt by the Bank from the Borrower of a Drawdown Notice not later
than 10 a.m. (London time) on the second Banking Day before the date on which the drawdown
is intended to be made. A Drawdown Notice shall be effective on actual receipt thereof by
the Bank and, once given, shall, subject as provided in Clause 3.6, be irrevocable.
	 
	2.3	 	Number of Advances Agreed
	 
	 	 	The Commitment shall be advanced to the Borrower in one advance.

11

 

	2.4	 	Disbursement
	 
	 	 	Upon receipt of the Drawdown Notice complying with the terms of this Agreement the Bank
shall, subject to the provisions of Clause 7, on the date specified in the Drawdown Notice,
make the Commitment available to the Borrower.
	 
	2.5	 	Application of Proceeds
	 
	 	 	Without prejudice to the Borrower’s obligations under Clause 8.7, the Bank shall have no
responsibility for the application of the proceeds of the Loan (or any part thereof) by the
Borrower.
	 
	2.6	 	Termination Date of the Commitment
	 
	 	 	Any part of the Commitment undrawn and uncancelled at the end of the Availability Period
shall thereupon be automatically cancelled and the Bank shall have no further obligation to
the Borrower in respect of such undrawn part.
	 
	2.7	 	Evidence
	 
	 	 	It is hereby expressly agreed and admitted by the Borrower that abstracts or photocopies of
the books of the Bank as well as statements of accounts or a certificate signed by an
authorised officer of the Bank shall be conclusive binding and full evidence on the Borrower
as to the existence and/or the amount of the at any time Outstanding Indebtedness, of any
amount due under this Agreement, of the applicable interest rate or Default Rate or any
other rate provided for or referred to in this Agreement, the Interest Period, the value of
additional securities under Clause 8.5(c), the payment or non payment of any amount and/or
the occurrence of any other Event of Default. Nevertheless, enforcement procedures or any
other court or out-of-court procedure can be commenced by the Bank on the basis of the above
mentioned means of evidence including written statements or certificates of the Bank.
	 
	2.8	 	Cancellation
	 
	 	 	The Borrower may, cancel any undrawn part of the Commitment under this Agreement upon giving
the Bank not less than five (5) Banking Days’ notice in writing to that effect, provided
that no Drawdown Notice has been given to the Bank under Clause 2.2 for the full amount
of the Commitment or in respect of the portion thereof in respect of which cancellation is
required by the Borrower. Any such notice of cancellation, once given, shall be
irrevocable. Any amount cancelled may not be drawn. Notwithstanding any such cancellation
pursuant to this Clause 2.8 the Borrower shall continue to be liable for any and all amounts
due to the Bank under this Agreement including without limitation any amounts due to the
Bank under Clause 10.
	 
	2.9	 	Currency Option

	 	(a)	 	Subject to the provisions of Clauses 2.9(b) and (g), if the Borrower so
requests in a Drawdown Notice or, in any case other than drawdown of an Advance, by an
irrevocable notice received by the Bank not later than 10:00 a.m. (London time) on the
second Banking Day before the beginning of an Interest Period, the relevant Advance,
may be drawn down in an Optional Currency or, as the case may be, on the first day of
any Interest Period relating thereto, the Loan may be converted into an, or another,
Optional Currency, but if no such request is received by the Bank the Commitment or ,
as the case may be, the relevant Advance, will be drawn down in Dollars or, as the case
may be, the Loan shall remain outstanding in the currency in which it was outstanding
during its immediately preceding Interest Period, provided however that if the
Borrower

12

 

	 	 	 	shall request that the Loan, or as the case may be the relevant Advance be converted
into another Optional Currency on any Banking Day during any Interest Period
relating thereto and the Bank shall accede to such request (it being in the
reasonable discretion of the Bank to decide whether or not to do so) the Borrower
will repay the Loan in the currency in which it was outstanding at the time of
repayment together with any such sum as may be payable to the Bank pursuant to
Clause 10.1. The Loan may not be denominated in more than one currency at any time.
	 
	 	(b)	 	An Advance, may not be drawn down in and the Loan may not be converted into or
remain outstanding in an Optional Currency if the Bank determines (which determination
shall be conclusive) at any time prior to 10:00 a.m. London Time on the first day of
the relevant Interest Period that deposits of such Optional Currency are not readily
available to the Bank in the London Interbank Market in an amount comparable with the
amount of the relevant Advance or, as the case may be, the Loan, or that by reason of
any change in currency availability, currency exchange rates or exchange controls it is
or will be impracticable for an Advance to be drawn down in, or, as the case may be,
the Loan converted into or remain outstanding in such other Optional Currency as may
have been agreed between the Borrower and the Bank or, failing agreement, the
provisions of Clause 12.2 shall apply.
	 
	 	(c)	 	If an Advance is to be drawn down in an Optional Currency other than Dollars,
the Bank shall advance to the Borrower on the relevant Drawdown Date the Equivalent
Amount in the relevant Optional Currency of the amount of the relevant Advance.
	 
	 	(d)	(i) 	 Subject to Clauses 2.9(d)(ii) and (iii), 2.9(f) and 7.4, if the Loan is to
be converted into an Optional Currency other than the Optional Currency in which the
Loan is outstanding, the Bank shall re-advance to the Borrower on the first day of the
relevant Interest Period, such amount of such other Optional Currency as it is
necessary for the repayment in full of the Loan in the amount and in the currency in
which the same was outstanding in the immediately preceding Interest Period subject to
the provisions of sub-Clause 2.9(d)(ii) below.

	 	(ii)	 	the obligation of the Bank to re-advance the amount referred to
in sub-Clause 2.9(d)(i) above is subject to the following paramount provisions
i.e. that:

	 	(aa)	 	if the Equivalent Amount in Dollars of the
amount required for the repayment of the Loan exceeds the Dollar Amount
of the Loan by more than 10% (but no more than 20%), the Bank shall
re-advance such amount in the new Optional Currency only on condition
that the Borrower shall have provided the Bank with further security
(in form and substance satisfactory of the Bank) in an amount equal to
such excess; and
	 
	 	(bb)	 	if the Equivalent Amount in Dollars of the
amount required for the repayment of the Loan exceeds the Dollar Amount
of the Loan by more than 20% the Bank shall not re-advance such excess
and the Borrower shall have the obligation to pay to the Bank such
excess and such payment by the Borrower shall be a condition precedent
for the obligation of the Bank to re-advance the amounts referred in
Clause 2.9(d)(i).

	 	(iii)	 	The obligations to advance and repay the Loan referred to
above in sub-Clauses 2.9(d)(i) and (ii) (with the exception of the repayment
under sub-

13

 

	 	 	 	Clause (ii) above) are only notional and will be made by the Bank making an
appropriate adjustment or adjustments in the principal amount of the Loan in
the relevant account or accounts referred to in Clause 2.7 and in all other
respects the Loan shall remain the same Loan.

	 	(e)	 	The Bank may from time to time, at its discretion, determine the Equivalent
Amount of the Loan in Dollars as at a particular date and shall certify such Equivalent
Amount to the Borrower. If the Equivalent Amount so certified exceeds 110% per cent of
the Dollar Amount of the Loan but does not exceed 120% of the Dollar Amount of the Loan
the Borrower shall forthwith on demand by the Bank pledge in favour of the Bank
deposits in account(s) maintained in the name of Security Party(ies) with the Bank
and/or provide to the Bank other further security, in each case in form and substance
satisfactory to the Bank (at the discretion of the Bank) in an amount equal to the
excess over 110% per cent of such Dollar Amount or, as the case may be, the Equivalent
Amount in the relevant Optional Currency of the amount of such excess.
	 
	 	(f)	 	If the Equivalent Amount so certified exceeds 120% of the Dollar Amount of the
Loan, the Borrower shall forthwith on demand by the Bank pay to the Bank an amount
equal to excess over 120% of such Dollar Amount, such amount to be applied by the Bank
towards prepayment of the Loan in the relevant currency of the amount of such excess.
	 
	 	(g)	 	At the request of the Bank whenever the Loan is to be converted from one
currency into another, the Borrower and the Guarantors, at their expense and as a
condition precedent to or simultaneously with the conversion of the Loan at the
commencement of the relevant Interest Period, shall execute, sign, perfect, do and (if
required) register every such further assurance, document, act or thing (all in form
and substance satisfactory to the Bank) as in the opinion of the Bank may be necessary
or desirable for the purpose of more effectually mortgaging and charging the property
the subject of the Security Documents or perfecting the security constituted or
intended to be constituted by the Security Documents or any of them in respect of the
proposed conversion of the Loan.
	 
	 	(h)	 	If a Default shall occur and be subsisting, the Borrower shall not be
entitled to request conversion of the Loan and the Loan shall be maintained in the
currency in which it is then outstanding or, at the sole discretion of the Bank,
converted into Dollars at any time following and during the subsistence of such
Default.
	 
	 	(i)	 	All foreign exchange deals concerning conversions of the Loan must be made
with the Bank.
	 
	 	(j)	 	All costs, expenses and risks incidental to any currency conversion pursuant
to this clause 2.9 shall be borne by the Borrower.

	2.10	 	No security or lien from other person
	 
	 	 	The Borrower has not taken or received, and the Borrower undertakes that until all moneys,
obligations and liabilities due, owing or incurred by the Borrower under this Agreement and
the Security Documents have been paid in full, it will not take or receive, any security or
lien from any other person liable or for any liability whatsoever.
	 
	3.	 	INTEREST
	 
	3.1	 	Normal Interest Rate

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	 	 	The Borrower shall pay interest on the Loan (or as the case may be, each portion thereof to
which a different Interest Period relates) in respect of each Interest Period related
thereto on each Interest Payment Date and in case of any Interest Period longer than three
(3) months interest shall be payable quarterly in arrears and on the last day of such
Interest Period. The interest rate for the calculation of interest shall be the rate per
annum determined by the Bank to be the aggregate of (i) the Margin and (ii) LIBOR.
	 
	3.2	 	Selection of Interest Period
	 
	 	 	The Borrower may by notice received by the Bank not later than 10 a.m. (London time) on the
second Banking Day before the beginning of each Interest Period specify (subject to Clause
3.3 below) whether such Interest Period shall have a duration of three (3) or six (6) months
(or such other period up to 24 months as may be requested by the Borrower subject to market
availability).
	 
	3.3	 	Duration of Interest Period
	 
	 	 	Every Interest Period shall, subject to market availability to be conclusively determined by
the Bank, be of the duration specified by the Borrower pursuant to Clause 3.2 but so that:

	 	(a)	 	the initial Interest Period in respect of the Loan will commence on the
Drawdown Date and each subsequent Interest Period will commence forthwith upon the
expiry of the previous Interest Period;
	 
	 	(b)	 	if any Interest Period would otherwise overrun one or more Repayment Dates,
then, in the case of the last Repayment Date, such Interest Period shall end on such
Repayment Date, and in the case of any other Repayment Date or Dates the Loan shall be
divided into parts so that there is one part equal to the amount of the Repayment
Instalment due on each Repayment Date falling during that Interest Period and having an
Interest Period ending on the relevant Repayment Date and another part equal to the
amount of the balance of the Loan having an Interest Period determined in accordance
with Clause 3.2 and the other provisions of this Clause 3.3 and the expression
“Interest Period in respect of the Loan” when used in this Agreement refers to the
Interest Period in respect of the balance of the Loan;
	 
	 	(c)	 	if the Borrower fails to specify the duration of an Interest Period in
accordance with the provisions of Clause 3.2 and this Clause 3.3, such Interest Period
shall have a duration of three (3) months unless another period shall be agreed between
the Bank and the Borrower provided always that such period shall comply with
this Clause 3.3; and
	 
	 	(d)	 	if the Bank determines that funds for the duration of an Interest Period
specified by the Borrower in accordance with Clause 3.2 are not readily available, then
that Interest Period shall have such duration as the Bank, in consultation with the
Borrower, may determine.

	3.4	 	Default Interest
	 
	 	 	If the Borrower fails to pay any sum (including, without limitation, any sum payable
pursuant to this Clause 3.4) on its due date for payment under any of the Security
Documents, the Borrower shall pay interest on such sum from the due date up to the date of
actual payment (as well after as before judgement) at the rate determined by the Bank
pursuant to this Clause 3.4. The period beginning on such due date and ending on such date
of payment shall be divided into successive periods of not more than six (6) months as
selected by the Bank each of which (other than the first, which

15

 

	 	 	shall commence on such due date) shall commence on the last day of the preceding such
period. The rate of interest applicable to each such period shall be the aggregate (as
determined by the Bank) of (i) two and a half per cent (2.5%), per annum, (ii) the Margin
and (iii) the LIBOR. Such interest shall be due and payable on the last day of each such
period as determined by the Bank and each such day shall, for the purposes of this
Agreement, be treated as an Interest Payment Date. In case that a payment is made in
default for any amount, the Interest Periods will be determined by the Bank at its
discretion including the amounts for which there is no default, even if the Bank has not
(yet) exercised its rights pursuant to Clause 9.9(b) of this Agreement. If for the reasons
specified in Clause 3.6, the Bank is unable to determine a rate in accordance with the
foregoing provisions of this Clause 3.4, interest on any sum not paid on its due date for
payment shall be calculated at a rate determined by the Bank to be two and a half per cent
(2.5%) per annum above the aggregate of the Margin and costs of funds to the Bank as
conclusively determined by the Bank save for manifest error. Interest payable by the
Borrower as aforesaid shall be compounded semi-annually (or if the period fixed by the Bank
is longer, at the end of such longer period) and shall be payable on demand.
	 
	3.5	 	Notification of Interest and Interest Rate
	 
	 	 	The Bank shall notify the Borrower promptly of the duration of each Interest Period and of
each rate of interest determined by it under this Clause 3 without prejudice to the right of
the Bank to make determinations at its sole discretion. However, omission of the Bank to
make such notification (without the application of the Borrower) will not constitute and
will not be interpreted as if to constitute a breach of obligation of the Bank except in
case of wilful misconduct.
	 
	3.6	 	Market disruption — Non Availability

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

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

16

 

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

	3.7	 	Fixed interest rate
	 
	 	 	At the request of the Borrower to be submitted to the Bank in writing at least ten (10)
Banking Days before the date of the drawdown or ten (10) Banking Days before the first day
of any Interest Period, the Bank may in its absolute discretion agree in writing that
notwithstanding clause 3.1 the Borrower shall pay interest on the whole of the Loan or part
thereof at such fixed interest rate as may be advised by the Bank to the Borrower, such rate
to be payable for the whole or, as the case may be, any part of the remaining, duration of
the Loan as the Bank may agree in its absolute discretion or any other period acceptable to
the Bank in excess of twelve (12) months but no longer than twenty four (24) months. In the
event that a fixed interest rate is agreed, interest on the whole amount of the Loan or part
thereof shall be paid by the Borrower on each Repayment Date and it is clearly acknowledged
and agreed by the Borrower that the Bank will agree to such fixed interest rate only on
condition that the Bank may in its absolute discretion, but at the sole risk and expense of
the Borrower, enter into one or more interest swap agreements and/or other hedging
arrangements and/or derivative products with third parties or with another department of the
Bank in order to hedge its exposure to the fixed interest rate agreed with the Borrower. The
Borrower hereby expressly acknowledges and agrees that the Bank may enter into any such swap
agreements and/or other hedging arrangements and/or derivative products and that the Bank
may in its absolute discretion prematurely terminate any such agreements and/or arrangements
in case of any prepayment under Clauses 4.2 (Voluntary Prepayment), 4.3 (Compulsory
Prepayment in case of Total Loss) or any other prepayment under this Agreement as well as in
case of a default by the Borrower under this Agreement or any of the Security Documents. In
the case of any such termination (and without prejudice to any other right that the Bank may
have under any of the Security Documents, including without limitation Clauses 10.1
(Indemnity) and 10.2 (Expenses) of the Agreement), the Borrower undertakes to indemnify the
Bank immediately on demand against any cost or loss or damage (including any cost or loss or
damage connected with the premature termination of the said swap agreements and/or other
hedging arrangements and/or derivative products entered into by the Bank) which the Bank
shall certify as sustained or incurred by it as a consequence of any prepayment of the Loan
or any part thereof at any time (whether such prepayment is made at the beginning or at the
end of an Interest Period) and/or as a consequence of any default of the Borrower under this
Agreement or any of the Security Documents. In case of default in payment by any of the
Security Parties of any sum under any of the Security Documents when due, Clause 3.4
(Default Interest) shall apply.
	 
	4.	 	REPAYMENT — PREPAYMENT
	 
	4.1	 	 Repayment

17

 

	 	 	The Borrower shall and it is expressly undertaken by the Borrower to
repay the Loan by (a) twelve (12) consecutive semi-annual equal
Repayment Instalments to be repaid on each of the Repayment Dates so
that the first be repaid on the date falling six (6) months after the
Drawdown Date and each of the subsequent ones consecutively falling
due for payment on each of the dates falling six (6) months after the
immediately preceding Repayment Date with the last (the
12th) of such Repayment Instalments falling due for payment
on the Final Maturity Date and (b) the Balloon Instalment payable
together with the last Repayment Instalment on the Final Maturity
Date; subject to the provisions of this Agreement, each of the
Repayment Instalments shall be in the amount of $900,000 (Nine hundred
thousand Dollars);

provided however that, notwithstanding the aforesaid, in case that the
Loan or any part thereof is outstanding in an Optional Currency other
than Dollars, the amount of each Repayment Instalment and the Balloon
Instalment shall equal to the Equivalent Amount in Dollars of the
outstanding amount of the relevant Repayment Instalment, or as the
case may be, the Balloon Instalment (being the amount thereof in the
relevant Optional Currency in which the relevant Repayment Instalment
or as the case may be, the Balloon Instalment, is denominated on the
relevant Repayment Date); and
	 
	 	 	provided further that (a) in the event that the Commitment is not drawn down in
full, the amount of each Repayment Instalment and the Balloon Instalment shall be reduced
pro rata by the amount of the part of the Commitment not drawn and (b) on the Final Maturity
Date the Borrower shall also pay to the Bank any and all other monies then due and payable
under this Agreement and the other Security Documents, and (c) if any of the Repayment
Instalments shall become due on a day which is not a Banking Day, the due date therefor
shall be extended to the next succeeding Banking Day unless such Banking Day falls in the
next calendar month, in which event such due date shall be the immediately preceding Banking
Day.
	 
	4.2	 	Voluntary Prepayment
	 
	 	 	The Borrower shall have the right, upon giving the Bank not less than five (5) Banking Days’
notice in writing, to prepay part or all of the Loan in each case together with all unpaid
interest accrued thereon and all other sums of money whatsoever due and owing from the
Borrower to the Bank hereunder or pursuant to the other Security Documents and all interest
accrued thereon, provided that:

	 	(a)	 	the giving of such notice by the Borrower will irrevocably commit the Borrower
to prepay such amount as stated in such notice;
	 
	 	(b)	 	such prepayment may take place only on the last day of an Interest Period in
respect of the Loan provided however, that if the Borrower shall request
consent to make such prepayment on another day and the Bank shall accede to such
request (it being in the reasonable discretion of the Bank to decide whether or not to
do so) the Borrower will pay in addition to the amount to be prepaid, any such sum as
may be payable to the Bank pursuant to Clause 10.1;
	 
	 	(c)	 	each partial prepayment shall be equal to $900,000 (Nine hundred thousand
Dollars) or the equivalent thereof in the Optional Currency at which the Loan is at the
time denominated or a whole multiple thereof or the balance of the Loan;
	 
	 	(d)	 	any prepayment of less than the whole of the Loan will be applied towards
satisfaction first of the Balloon Instalment and then the outstanding Repayment
Instalments in the inverse order of maturity;
	 
	 	(e)	 	every notice of prepayment shall be effective only on actual receipt (including
by fax) by the Bank, shall be irrevocable and shall oblige the Borrower to make such
prepayment on the date specified;

18

 

	 	(f)	 	no amount prepaid may be re-borrowed; and

	 	(g)	 	the Borrower may not prepay the Loan or any part thereof save as expressly
provided in this Agreement.

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

	 	(a)	 	On the Vessel becoming a Total Loss or suffering damage or being involved in an
incident which in the reasonable opinion of the Bank may result in the Vessel being
subsequently determined to be a Total Loss:

	 	(i)	 	prior to the advancing of the Commitment, the obligation of the
Bank to advance the Commitment shall immediately cease and the Commitment shall
be reduced to zero; or
	 
	 	(ii)	 	in case the Commitment has been already advanced, the Borrower
shall prepay the Outstanding Indebtedness the latest on the date falling one
hundred and fifty (150) days after that on which the incident which in the
reasonable opinion of the Bank may result in the Vessel being subsequently
determined to be a Total Loss occurred or, if earlier, on the date upon which
the insurance proceeds in respect of such Total Loss are or Requisition
Compensation is received by the Borrower (or the Bank pursuant to the Security
Documents).

	 	 	 	For the purpose of this Agreement:

	 	(i)	 	an actual total loss of the Vessel shall be deemed to have
occurred at the actual date and time the Vessel was lost but in the event of
the date of the loss being unknown then the actual total loss shall be deemed
to have occurred on the date on which the Vessel was last reported;
	 
	 	(ii)	 	a constructive total loss shall be deemed to have occurred at
the date and time notice of abandonment of the Vessel is given to the insurers
of the Vessel for the time being (provided a claim for total loss is admitted
by such insurers) or, if such insurers do not admit such a claim, at the date
and time at which a total loss is subsequently adjudged by a competent court of
law to have occurred;
	 
	 	(iii)	 	a compromised or arranged total loss shall be deemed to have
occurred on the date on which a binding agreement as to such compromised or
arranged total loss has been entered into by the insurers of the Vessel;
	 
	 	(iv)	 	requisition for title or other compulsory acquisition of the
Vessel shall be deemed to have occurred on the date upon which the relevant
requisition for title or other compulsory acquisition occurs; and
	 
	 	(v)	 	hijacking, theft, condemnation, capture, seizure, detention,
arrest, or confiscation of the Vessel by any government or by any person acting
or purporting to act on behalf of any government, which deprives the Borrower
of the use of the Vessel for more than thirty (30) days shall be deemed to
occur upon the expiry of the period of thirty (30) days after the date upon
which the relevant hijacking, theft, condemnation, capture, seizure, detention,
arrest or confiscation occurred.

	 	(b)	 	In case of sale or other disposal of the Vessel, immediately upon completion of
such sale or other disposal, the Borrower shall prepay the Loan.

	4.4	 	 Amounts payable on prepayment

19

 

	 	 	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 (calculated, in the case of a
prepayment pursuant to Clause 3.6 (b) at a rate equal to the aggregate
of the Margin and the cost to the Bank of funding the Loan), (b) any
additional amount payable under Clause 5 and (c) all other sums
payable by the Borrower to the Bank under this Agreement or any of the
other Security Documents including, without limitation, any amounts
payable under Clause 10.
	 
	5.	 	PAYMENTS, TAXES, LOAN ACCOUNT AND COMPUTATION
	 
	5.1	 	Payments — No set-off or Counterclaims

	 	(a)	 	The Borrower acknowledges that in performing its obligations under this
Agreement, the Bank will be incurring liabilities to third parties in relation to the
funding of amounts to the Borrower, such liabilities matching the liabilities of the
Borrower to the Bank and that it is reasonable for the Bank to be entitled to receive
payments from the Borrower gross on the due date in order that the Bank is put in a
position to perform its matching obligations to the relevant third parties.
Accordingly, all payments to be made by the Borrower under this Agreement and/or any of
the other Security Documents shall be made in full, without any set-off or counterclaim
whatsoever and, subject as provided in Clause 5.3, free and clear of any deductions or
withholdings or Governmental Withholdings whatsoever, in the Optional Currency in which
the Loan is at the time denominated on the due date to the account of the Bank at such
bank and in such place as the Bank may from time to time specify for that purpose,
reference: “Grand Markela Inc. - Loan Agreement”, provided however, that the
Bank shall have the right to change the place of account for payment, upon eight (8)
Banking Days’ prior written notice to the Borrower.
	 
	 	(b)	 	If at any time it shall become unlawful or impracticable for the Borrower to
make payment under this Agreement to the relevant account or bank referred to in Clause
5.1(a), the Borrower may request and the Bank may agree to alternative arrangements for
the payment of the amounts due by the Borrower to the Bank under this Agreement or the
other Security Documents.

	5.2	 	Payments on Banking Days
	 
	 	 	All payments due shall be made on a Banking Day. If the due date for a payment falls on a
day which is not a Banking Day, that payment due shall be made on the next following Banking
Day unless such Banking Day falls in the next calendar month in which case payment shall be
made on the immediately preceding Banking Day.
	 
	5.3	 	Gross Up
	 
	 	 	If at any time any law, regulation, regulatory requirement or requirement of any
governmental authority, monetary agency, central bank or the like compels the Borrower to
make payment subject to Governmental Withholdings, or any other deduction or withholding,
the Borrower shall pay to the Bank such additional amounts as may be necessary to ensure
that there will be received by the Bank a net amount equal to the full amount which would
have been received had payment not been made subject to such Governmental Withholdings or
other deduction or withholding. The Borrower shall indemnify the Bank against any losses or
costs incurred by the Bank by reason of any failure of the Borrower to make any such
deduction or withholding or by reason of any increased payment not being made on the due
date for such payment. The Borrower shall, not later than thirty (30) days after each
deduction, withholding or payment of any Governmental Withholdings, forward to the Bank
official receipts and any other documentary receipts and any other documentary

20

 

	 	 	evidence reasonably required by the Bank in respect of the payment made or to be made of any
deduction or withholding or Governmental Withholding. The obligations of the Borrower under
this provision shall, subject to applicable law, remain in force notwithstanding the
repayment of the Loan and the payment of all interest due thereon pursuant to the provisions
of this Agreement.
	 
	5.4	 	Certificates Conclusive
	 
	 	 	Any certificate or determination of the Bank as to any rate of interest, rate of exchange or
any other amount pursuant to and for the purposes of any of the Security Documents shall, in
the absence of manifest error, be conclusive and binding on the Borrower.
	 
	5.5	 	Computation
	 
	 	 	All interest and other payments payable by reference to a rate per annum under this
Agreement shall accrue from day to day and be calculated on the basis of actual days elapsed
and a 360 day year.
	 
	6.	 	REPRESENTATIONS AND WARRANTIES
	 
	6.1	 	The Borrower hereby represents and warrants to the Bank that:
	 
	 	 	Continuing representations and warranties

	 	(a)	 	Due Incorporation/Valid Existence
	 
	 	 	 	the Borrower and each of the other corporate Security Parties is duly incorporated
and validly existing and in good standing under the laws of their respective
countries of incorporation as limited liability companies, and have power to own
their respective property and assets, to carry on their respective business as the
same are now being lawfully conducted and to purchase, own, finance and operate
vessels, or, as the case may be, manage vessels, as well as to undertake the
obligations which they have undertaken or shall undertake pursuant to the Security
Documents;
	 
	 	(b)	 	Due Corporate Authority
	 
	 	 	 	each of the Borrower and the other Security Parties has power to execute, deliver
and perform its obligations under the Security Documents to which it is a party and
to borrow the Commitment and each of the other Security Parties has power to execute
and deliver and perform its obligations under the Security Documents to which it is
or is to be a party; all necessary corporate, shareholder and other action has been
taken to authorise the execution, delivery and performance of the same and no
limitation on the powers of the Borrower to borrow will be exceeded as a result of
borrowing the Loan;
	 
	 	(c)	 	Litigation
	 
	 	 	 	no litigation, arbitration, tax claim or administrative proceeding involving a
potential liability of the Borrower or any other Security Party is current or
pending or (to its or its officers’ knowledge) threatened against the Borrower or
any other Security Party, which, if adversely determined, would have a materially
adverse effect on the business assets or the financial condition of any of them;
	 
	 	(d)	 	No conflict with other obligations

21

 

	 	 	 	the execution and delivery of, the performance of its obligations under, and
compliance with the provisions of, the Security Documents by the relevant Security
Parties will not (i) contravene any existing applicable law, statute, rule or
regulation or any judgment, decree or permit to which the Borrower or any other
Security Party is subject, (ii) conflict with, or result in any breach of any of the
terms of, or constitute a default under, any agreement or other instrument to which
the Borrower or any other Security Party is a party or is subject to or by which it
or any of its property is bound, (iii) contravene or conflict with any provision of
the memorandum and articles of association/articles of
incorporation/by-laws/statutes or other constitutional documents of the Borrower or
any other Security Party or (iv) result in the creation or imposition of or oblige
the Borrower or any other Security Party to create any Encumbrance (other than a
Permitted Encumbrance) on any of the undertakings, assets, rights or revenues of the
Borrower or any other Security Party;
	 
	 	(e)	 	Financial Condition
	 
	 	 	 	the financial condition of the Borrower and of the other Security Parties has not
suffered any material deterioration since that condition was last disclosed to the
Bank;
	 
	 	(f)	 	No Immunity
	 
	 	 	 	neither the Borrower nor any other Security Party nor any of their respective assets
are entitled to immunity on the grounds of sovereignty or otherwise from any legal
action or proceeding (which shall include, without limitation, suit, attachment
prior to judgement, execution or other enforcement);
	 
	 	(g)	 	Shipping Company
	 
	 	 	 	each of the Borrower and the Approved Manager is a shipping company involved in the
owning or, as the case may be, managing of ships engaged in international voyages
and earning profits in free foreign currency;
	 
	 	(h)	 	Licences/Authorisation
	 
	 	 	 	every consent, authorisation, license or approval of, or registration with or
declaration to, governmental or public bodies or authorities or courts required by
any Security Party to authorise, or required by any Security Party in connection
with, the execution, delivery, validity, enforceability or admissibility in evidence
of each of the Security Documents or the performance by each Security Party of its
obligations under the Security Documents has been obtained or made and is in full
force and effect and there has been no default in the observance of any of the
conditions or restrictions (if any) imposed in, or in connection with, any of the
same so far as the Borrower is aware;
	 
	 	(i)	 	Perfected Securities
	 
	 	 	 	when duly executed, the Security Documents will create a perfected security interest
in favour of the Bank, with the intended priority, over the assets and revenues
intended to be covered, valid and enforceable against the Borrower and the other
Security Parties;
	 
	 	(j)	 	No Notarisation/Filing/Recording

22

 

	 	 	 	save for the registration of any mortgage in the Registry, it is not necessary to
ensure the legality, validity, enforceability or admissibility in evidence of this
Agreement or any of the other Security Documents that it or they or any other
instrument be notarised, filed, recorded, registered or enrolled in any court,
public office or elsewhere or that any stamp, registration or similar tax or charge
be paid on or in relation to this Agreement or the other Security Documents;
	 
	 	(k)	 	Validity and Binding effect
	 
	 	 	 	the Security Documents constitute (or upon their execution — and in the case of any
mortgage upon its registration at the Registry — will constitute) valid and legally
binding obligations of the relevant Security Parties enforceable against the
Borrower and the other Security Parties in accordance with their respective terms
and that there are no other agreements or arrangements which may adversely affect or
conflict with the Security Documents or the security thereby created; and
	 
	 	(l)	 	Valid Choice of Law
	 
	 	 	 	the choice of law agreed to govern this Agreement and/or any other Security Document
and the submission to the jurisdiction of the courts agreed in each of the Security
Documents are or will be, on execution of the respective Security Documents, valid
and binding on the Borrower and any other Security Party which is or is to be a
party thereto.
	 
	 	6.2	 	The Borrower hereby further represents and warrants to the Bank that:
	 
	 	Initial representations and warranties

	 	(a)	 	Direct obligations — Pari Passu
	 
	 	 	 	the obligations of the Borrower under this Agreement are direct, general and
unconditional obligations of the Borrower and rank at least pari passu with all
other present and future unsecured and unsubordinated Indebtedness of the Borrower
with the exception of any obligations which are mandatorily preferred by law;
	 
	 	(b)	 	Information
	 
	 	 	 	all information, accounts, statements of financial position, exhibits and reports
furnished by or on behalf of any Security Party to the Bank in connection with the
negotiation and preparation of this Agreement and each of the other Security
Documents are true and accurate in all material respects and not misleading, do not
omit material facts and all reasonable enquiries have been made to verify the facts
and statements contained therein; to the knowledge of the Directors/Officers of the
Borrower, there are no other facts the omission of which would make any fact or
statement therein misleading and, in the case of accounts and statements of
financial position, they have been prepared in accordance with generally accepted
accounting principles which have been consistently applied;
	 
	 	(c)	 	No Default
	 
	 	 	 	no Default has occurred and is continuing;
	 
	 	(d)	 	No Taxes

23

 

	 	 	 	no Taxes are imposed by deduction, withholding or otherwise on any payment to be
made by any Security Party under this Agreement and/or any other of the Security
Documents or are imposed on or by virtue of the execution or delivery of this
Agreement and/or any other of the Security Documents or any document or instrument
to be executed or delivered hereunder or thereunder. In case that any Tax exists
now or will be imposed in the future, it will be borne by the Borrower;
	 
	 	(e)	 	No Default under other Indebtedness
	 
	 	 	 	neither the Borrower nor any other Security Party is in Default under any agreement
relating to Indebtedness to which it is a party or by which it may be bound;
	 
	 	(f)	 	Ownership/Flag/Seaworthiness/Class/Insurance of the Vessel
	 
	 	 	 	the Vessel on the Drawdown Date will be:

	 	(i)	 	in the absolute and free from Encumbrances (other than in
favour of the Bank) ownership of the Borrower who will on and after the
Drawdown Date be the sole legal and beneficial owner of the Vessel;
	 
	 	(ii)	 	registered in the name of the Borrower through the Registry
under the laws and flag of the Flag State;
	 
	 	(iii)	 	operationally seaworthy and in every way fit for service;
	 
	 	(iv)	 	classed with a classification society which is a member of IACS
and which has been approved by the Bank in writing and such class will be free
of all requirements and recommendations of such classification society;
	 
	 	(v)	 	insured in accordance with the provisions of this Agreement;
	 
	 	(vi)	 	managed by the Approved Manager; and
	 
	 	(vii)	 	in full compliance with the ISM Code and the ISPS Code;

	 	(g)	 	No Charter
	 
	 	 	 	the Vessel will not on or before the Drawdown Date be subject to any charter or
contract nor to any agreement to enter into any charter or contract which, if
entered into after the Drawdown Date would have required the consent of the Bank
under any of the Security Documents and there will not on or before the Drawdown
Date be any agreement or arrangement whereby the Earnings of the Vessel may be
shared with any other person;
	 
	 	(h)	 	No Encumbrances
	 
	 	 	 	neither the Vessel, nor its Earnings, Requisition Compensation or Insurances nor any
other properties or rights which are, or are to be, the subject of any of the
Security Documents nor any part thereof will, on the Drawdown Date, be subject to
any Encumbrances other than Permitted Encumbrances;
	 
	 	(i)	 	Compliance with Environmental Laws and Approvals
	 
	 	 	 	except as may already have been disclosed by the Borrower in writing to, and
acknowledged in writing by, the Bank:

24

 

	 	(i)	 	the Borrower and its Related Companies have complied with the
provisions of all Environmental Laws;
	 
	 	(ii)	 	the Borrower and its Related Companies have obtained all
Environmental Approvals and are in compliance with all such Environmental
Approvals; and
	 
	 	(iii)	 	neither the Borrower nor any of its Related Companies have
received notice of any Environmental Claim that the Borrower or any of its
Related Companies are not in compliance with any Environmental Law or any
Environmental Approval;

	 	(j)	 	No Environmental Claims

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

	 	(aa)	 	there is no Environmental Claim pending or, to
the best of the Borrower’s knowledge and belief, threatened against the
Borrower or the Vessel or the Borrower’s Related Companies or any other
Relevant Ship; and
	 
	 	(bb)	 	there has been no emission, spill, release or
discharge of a Material of Environmental Concern from the Vessel or any
other Related Ship or any vessel owned by, managed or crewed by or
chartered to the Borrower which could give rise to an Environmental
Claim;

	 	(k)	 	Copies true and complete
	 
	 	 	 	the copies of the Bill of Sale and the Management Agreement delivered or to be
delivered to the Bank pursuant to clause 7 are, or will when delivered be, true and
complete copies of such documents; such documents will when delivered constitute
valid and binding obligations of the parties thereto enforceable in accordance with
their respective terms and there will have been no amendments or variations thereof
or defaults thereunder;
	 
	 	(l)	 	Application made for DOC and SMC
	 
	 	 	 	the Operator has applied for a DOC for itself and an SMC in respect of the Vessel
and that neither the Borrower nor any Operator is aware of any reason why such
application may be refused;
	 
	 	(m)	 	Compliance with ISPS code
	 
	 	 	 	the Vessel and any Operator complies or will on the drawdown of the Commitment
comply with the requirements of the ISPS Code; and
	 
	 	(n)	 	Money Laundering -Acting for its own account
	 
	 	 	 	in relation to the borrowing by the Borrower of the Loan, the performance and
discharge of its obligations and liabilities under this Agreement and the
transactions and other arrangements effected or contemplated by this Agreement, the
Borrower by entering into this Agreement and the other Security Documents is acting
for its own account and that the foregoing will not involve or lead to contravention
of any law, official, requirement or other regulatory measure or procedure
implemented to combat “money laundering” as defined in para (a) of Article 1 of the
Law 2331/1995 (as amended) of the

25

 

	 	 	 	Hellenic Republic and/or in Article 1 of the Directive (91/308/EEC) of the Council
of the European Community).

	6.3	 	Representations Correct
	 
	 	 	At the time of entering into this Agreement all above representations and warranties or any
other information given by the Borrower and/or the Guarantors to the Bank are true and
accurate.
	 
	6.4	 	Repetition of Representations and Warranties
	 
	 	 	The representations and warranties in this Clause 6 (except in relation to the
representations and warranties in Clause 6.2) shall be deemed to be repeated by the Borrower
on the Drawdown Date and on each Interest Payment Date throughout the Security Period.
	 
	7.	 	CONDITIONS PRECEDENT
	 
	7.1	 	Conditions precedent to the execution of this Agreement
	 
	 	 	The Borrower shall provide the Bank prior to the execution of this Agreement the following
documents and evidence in form and substance satisfactory to the Bank:

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

	 	(b)	 	a recent certificate of incumbency of each corporate Security Party issued by
the appropriate authority or, as appropriate, signed by the secretary or a director
thereof, stating the officers and the directors of each of them and containing
specimens of their respective signatures;
	 
	 	(c)	 	minutes of separate meetings of the directors and shareholders of each
corporate Security Party at which there was approved (inter alia) the entry into,
execution, delivery and performance of this Agreement, the other Security Documents and
any other documents executed or to be executed pursuant hereto or thereto to which the
relevant corporate Security Party is or is to be a party;
	 
	 	(d)	 	the original of any power(s) of attorney and any further evidence of the due
authority of any person signing this Agreement, the other Security Documents, and any
other documents executed or to be executed pursuant hereto or thereto on behalf of any
corporate person;
	 
	 	(e)	 	evidence that all necessary licences, consents, permits and authorisations
(including exchange control ones) have been obtained by any Security Party for the
execution, delivery, validity, enforceability, admissibility in evidence and the due
performance of the respective obligations under or pursuant to this Agreement and the
other Security Documents; and
	 
	 	(f)	 	evidence that the drawdown fee and the commitment commission due under Clause
10.8 has been paid in full; and
	 
	 	(g)	 	any other documents or recent certificates or other evidence which would be
required by the Bank in relation to any corporate Security Party evidencing that the
relevant Security Party has been properly established, continues to exist validly and
to be in good standing; and

26

 

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

	 	(a)	 	evidence that the Vessel will be duly registered in the ownership of the
Borrower through the Registry at the port of the Vessel’s port of registry under the
laws and flag of the Flag State free from any Encumbrances save for those in favour of
the Bank and otherwise as contemplated herein and free of any charter;
	 
	 	(b)	 	evidence in form and substance satisfactory to the Bank that the Vessel has
been or will — on drawdown — be insured in accordance with the insurance requirements
provided for in Schedule 2 of this Agreement and the other Security Documents
(including a Mortgagee’s Interest Insurance for an amount equal to 120% of the amount
of the Loan (herein “MII”), which the Bank may at any time effect on such terms and
with such insurers as shall from time to time be determined by the Bank) to be followed
by full copies of cover notes, policies, certificates of entry or other contracts of
insurance and irrevocable authority is hereby given to the Bank at any time at its
discretion to obtain copies of the policies, certificates of entry or other contracts
of insurance from the insurers and/or obtain any information in relation to the
Insurances relating to the Vessel;
	 
	 	(c)	 	certified true copy of the Management Agreement evidencing that the Vessel is
managed by the Approved Manager on terms acceptable to the Bank;
	 
	 	(d)	 	evidence that the trading certificates of the Vessel are valid and in force;
	 
	 	(e)	 	all necessary confirmations from the insurers of the Vessel that they will
issue letters of undertaking and endorse notice of assignment and loss payable clauses
on the Insurances, in form and substance satisfactory to the Bank in its sole
discretion and (- in the event of fleet cover — accompanied by waivers for liens for
unpaid premium of other vessels managed by the Approved Manager and which are not
subject to any mortgage in favour of the Bank);
	 
	 	(f)	 	each of the Security Documents (as set out in Clause 11.1) duly executed and
where appropriate duly registered with the appropriate Registry;
	 
	 	(g)	 	evidence that the Vessel is classed as specified in Clause 6.2(f)(iv) with
Lloyds Register of Shipping, or to a similar standard with another classification
society of like standing to be specifically approved by the Bank, and remains free from
any and all recommendations, overdue notations or average damage affecting class;
	 
	 	(h)	 	the Drawdown Notice in respect of the Commitment duly executed and issued;
	 
	 	(i)	 	copies of the DOC and SMC referred to in paragraph (a) in the definition of the
ISM Code Documentation certified as true and in effect by the Borrower and the Approved
Manager; and
	 
	 	(j)	 	copies of such ISM Code Documentation as the Bank may by written notice to the
Borrower have requested not later than two (2) days before the Drawdown Date certified
as true and complete in all material respects by the Borrower and the Approved Manager;

27

 

	 	(k)	 	if the Bank so requires, a satisfactory to the Bank physical condition survey
report on the Vessel together with a comprehensive record inspection from a surveyor
appointed by the Bank, at the Borrower’s expense; and
	 
	 	(l)	 	valuation of the Vessel, at the Borrower’s expense, as at a date determined by
the Bank but in any event before the relevant drawdown, prepared on the basis specified
in Clause 8.5(b) by major shipbrokers appointed and/or approved by the Bank in form and
substance satisfactory to the Bank in its sole discretion;
	 
	 	(m)	 	a copy of the Charterparty certified as true and complete by the legal counsel
of the Borrower;
	 
	 	(n)	 	evidence that any prior registration of the Vessel in the name of the Seller
has been cancelled and that no Encumbrances are registered against the Vessel on such
register;
	 
	 	(o)	 	evidence to the full satisfaction of the Bank, proving the Seller’s title to
the Vessel free of any Encumbrances, debts or claims of any nature whatsoever;
	 
	 	(p)	 	duly certified copies of corporate documentation of the Seller — comparable at
the discretion of the Bank to that provided in Clause 7.1 — proving the due
incorporation and existence of the Seller and the due authorisation of the sale of the
Vessel and the execution of all documents required in connection therewith;
	 
	 	(q)	 	duly certified copy of the Bill of Sale, the protocol of delivery and
acceptance of the Vessel as well as of all other Seller’s documents;

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

	 	(a)	 	the representations and warranties set out in Clause 6 and in each of the
Security Documents are true and correct on and as of each such time as if each was made
with respect to the facts and circumstances existing at such time;
	 
	 	(b)	 	no Default shall have occurred and be continuing or would result from the
drawdown; and
	 
	 	(c)	 	the Bank shall be satisfied that there has been no change in the ownership,
management, operations and/or adverse change in the financial condition of any Security
Party and the Group which (change) might, in the sole opinion of the Bank, be
detrimental to the interests of the Bank.

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

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

28

 

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

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

	7.5	 	Waiver of conditions precedent
	 
	 	 	The conditions specified in this Clause 7 are inserted solely for the benefit of the Bank
and may be waived by the Bank in whole or in part and with or without conditions. Without
prejudice to any of the other provisions of this Agreement, in the event that the Bank, in
its sole and absolute discretion, makes the Commitment available to the Borrower prior to
the satisfaction of all or any of the conditions referred to in Clause 7.1 and 7.2, the
Borrower hereby covenants and undertakes to satisfy or procure the satisfaction of such
condition or conditions within such period as the Bank may, in its sole and absolute
discretion, agree or specify in writing.
	 
	7.6	 	Further conditions precedent
	 
	 	 	The Bank may request and the Borrower shall within such period from the date of such request
as shall be reasonably determined by the Bank, deliver to the Bank on such request further
favourable certificates and/or opinions as to any or all of the matters which are the
subject of Clauses 6, 7, 8 and 9.
	 
	8.	 	COVENANTS
	 
	 	 	The Borrower hereby undertakes with the Bank that, from the date of this Agreement and as
long as any moneys are due and/or owing and/or outstanding under this Agreement or any of
the other Security Documents, the Borrower will:
	 
	8.1	 	Information Covenants

	 	(a)	 	Annual financial Statements
	 
	 	 	 	prepare and furnish the Bank, in form and substance satisfactory to the Bank, with:

	 	(i)	 	audited financial statements including balance sheet and profit
and loss accounts of the Borrower, prepared by auditors acceptable to the Bank
and in accordance with generally accepted accounting principles consistently
applied in respect of each financial year and deliver as many copies of the
same as the Bank may reasonably require as soon as practicable but not later
than 150 days after the end of the financial year to which they relate; and
	 
	 	(ii)	 	interim semi-annual un-audited financial statements of the
Borrower and deliver same to the Bank promptly but not later than 60 days after
the end of the semester period to which they relate;

	 	(b)	 	Financial Information
	 
	 	 	 	provide the Bank annually and from time to time as the Bank may reasonably request
and in form and substance satisfactory to the Bank with information on

29

 

	 	 	 	the financial conditions, cash flow position, commitments and operations of the
Borrower and the other Security Parties including cash flow analysis and voyage
accounts of any vessels owned by any such party with a breakdown of income and
running expenses showing net trading profit, trade payables and trade receivables,
such financial details to be certified by one of the directors of the relevant
company as to their correctness; and
	 
	 	(c)	 	Information on adverse change or Default
	 
	 	 	 	promptly inform the Bank of any occurrence which came to the knowledge of the
Borrower which might adversely affect the ability of the Borrower or any other
Security Party to perform its respective obligations under this Agreement and/or any
of the other Security Documents and of any Default forthwith upon becoming aware
thereof and will from time to time, if so requested by the Bank, confirm to the Bank
in writing that, save as otherwise stated in such confirmation, no Default has
occurred and is continuing;
	 
	 	(d)	 	Information on the employment of the Vessel
	 
	 	 	 	provide the Bank from time to time as the Bank may request with information on the
employment of the Vessel and any Relevant Ship as well as on the terms and
conditions of any charterparty, contract of affreightment, agreement or related
document in respect of the employment of the Vessel and any Relevant Ship, such
information to be certified by one of the directors of the Borrower as to their
correctness;

	8.2	 	Banking operations — Liquidity

	 	(a)	 	ensure that, all banking operations in connection with the Vessel are carried
out through the Lending Branch;

	 	(b)	 	ensure that throughout the Security Period the Borrower will maintain in
unencumbered (except in favour of the Bank) deposit account(s) maintained with the Bank
(including the Retention Account) average monthly balances of Four hundred thousand
Dollars ($400,000);

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

	 	(a)	 	No further Indebtedness
	 
	 	 	 	incur no further Indebtedness nor authorise or accept any capital commitments (other
than that normally associated with the day to day operations of the Vessel) nor
enter into any agreement for payment on deferred terms or hire agreement;
	 
	 	(b)	 	No Loans
	 
	 	 	 	not make any loans or advances to, or any investments or pay any interest thereon,
in any person, firm, corporation, joint venture or other entity including (without
limitation) any loan or advance to any officer, director, stockholder or employee
directly;
	 
	 	(c)	 	No Disposal of Assets/Dividends

30

 

	 	 	 	not dispose of any assets and not declare or pay any dividends or other distribution
upon any of the issued shares or otherwise dispose of any assets to any of the
shareholders of the Borrower; and
	 
	 	(d)	 	No Payments
	 
	 	 	 	except pursuant to this Agreement and the other Security Documents (or as expressly
permitted by the same) not pay out any funds to any company or person except in
connection with the administration of the Borrower, the operation, maintenance
and/or repair of the Vessel;

	8.4	 	Maintenance of Business and legal Structure

	 	(a)	 	Maintenance of Business Structure
	 
	 	 	 	not change the nature, organisation and conduct of its business as, owner of the
Vessel or carry on any business other than the business carried on at the date
hereof;
	 
	 	(b)	 	Maintenance of Legal Structure
	 
	 	 	 	ensure that none of the documents defining the constitution of the Borrower and/or
any corporate shareholder shall be altered in any manner whatsoever;
	 
	 	(c)	 	Control
	 
	 	 	 	ensure that no change shall be made directly or indirectly in the ownership,
beneficial ownership, control or management of the Borrower or any share therein or,
of the Vessel;
	 
	 	(d)	 	No merger
	 
	 	 	 	not merge or consolidate with any other company or person;
	 
	 	(e)	 	Subsidiaries
	 
	 	 	 	not form or acquire any Subsidiaries; and
	 
	 	(f)	 	Share capital and distribution
	 
	 	 	 	not purchase or otherwise acquire for value any shares of its capital or distribute
any of its present or future assets, undertakings, rights or revenues to any of its
shareholders;

	8.5	 	Pari passu/Value of Security

	 	(a)	 	Pari passu
	 
	 	 	 	ensure that its obligations under this Agreement shall, without prejudice to the
provisions of this Clause 8.5 at all times rank at least pari passu with all its
other present and future unsecured and unsubordinated Indebtedness with the
exception of any obligations which are mandatorily preferred by law and not by
contract;
	 
	 	(b)	 	Valuation of the Vessel
	 
	 	 	 	at any time (and at least once per year) that the Bank might consider to be (at the
reasonable discretion of the Bank) necessary or useful and at the expense

31

 

	 	 	 	of the Borrower, have the Vessel valued in Dollars, without, unless required by the
Bank, physical inspection and on the basis of sale for prompt delivery and free of
Encumbrances for cash at arm’s length on normal commercial terms as between a
willing seller and a willing buyer without taking into account the benefit of any
charterparty or other engagement concerning the Vessel (“the
basis of valuation”),
by a shipbroker appointed by the Bank for this purpose at the Bank’s sole
discretion;
	 
	 	(c)	 	Vessel’s Value to Debt Ratio-Additional Security
	 
	 	 	 	ensure and procure that the Security Value shall be in excess of the Security
Requirement and if at any relevant time the Security Value is less than the Security
Requirement, the Borrower shall within thirty (30) days of being advised by the Bank
of such shortfall, either prepay or provide additional security in form and
substance in all respects acceptable to the Bank in an amount at least equal to the
amount of such shortfall. Such additional security shall be constituted by:

	 	(i)	 	additional pledged cash deposits in favour of the Bank in an
amount equal to such shortfall with a bank and in an account and manner to be
determined by the Bank; and/or
	 
	 	(ii)	 	additional first preferred mortgage on a vessel acceptable to
the Bank at its sole discretion;
	 
	 	(iii)	 	any other security acceptable to the Bank to be provided in a
manner determined by the Bank.

	 	(d)	 	The value of the Vessel shall be determined for the purpose of Clause 8.5(b) as
provided in Clause 8.5(b) and shall be notified by the Bank to the Borrower and the
valuation of such shipbroker shall constitute the value of the Vessel for the purposes
of this Agreement and shall be binding upon the parties hereto. All costs in connection
with such valuation and any valuation of any additional security provided pursuant to
Clause 8.5(c) shall be borne by the Borrower. Any valuation referred to in Clause 8.5
to be addressed to the Bank,
	 
	 	 	 	provided however that in the event that the Market Value of the Vessel
(determined in accordance with Clause 8.5(b)) shall be less than the Security
Requirement then the value of the Vessel shall be determined by three (3)
shipbrokers appointed by the Bank for this purpose (one of which shall be the
initial valuator) and in that case the mean of such three (3) valuations of such
shipbrokers shall constitute the value of the Vessel for the purposes of this
Agreement and shall be binding upon the parties hereto.
	 
	 	(e)	 	Valuation of additional security
	 
	 	 	 	For the purpose of this Clause 8.5, the market value of any additional security
provided or to be provided to the Bank shall be determined by the Bank in its
absolute discretion without any necessity for the Bank assigning any reason thereto
provided always that if the additional security is in the form of a
collateral vessel such collateral vessel shall be valued in accordance with the
provisions of Clause 8.5(b) or if the additional security is in form of a cash
deposit full credit shall be given for such cash deposit on a Dollar for Dollar
basis.

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

	8.6	 	Maintenance of Assets

	 	(a)	 	No Transfer of Assets
	 
	 	 	 	not convey, assign, transfer, sell or otherwise dispose of or deal with any of their
real or personal property, assets or rights, whether present or future, without the
prior written consent of the Bank; and
	 
	 	(b)	 	No Encumbrance of Assets
	 
	 	 	 	not allow any part of its undertaking, property, assets or rights, whether present
or future, to be mortgaged, charged, pledged, used as a lien or otherwise encumbered
without the prior written consent of the Bank; and

	8.7	 	Covenants Concerning the Vessel

	 	(a)	 	Ownership/Management/Control
	 
	 	 	 	ensure that the Vessel will be registered on the Drawdown Date under the laws of the
Flag State and thereafter maintain her present ownership, management, control and
beneficial ownership;
	 
	 	(b)	 	Class
	 
	 	 	 	ensure that the Vessel will remain in class free of any and all recommendations,
overdue notations or average damage affecting class and provide the Bank on demand
with copies of all class and trading certificates of the Vessel;
	 
	 	(c)	 	Insurances
	 
	 	 	 	ensure that all Insurances of the Vessel are maintained and comply with all
insurance requirements specified in this Agreement and in case of failure to
maintain the Vessel so insured authorise the Bank (and such authorisation is hereby
expressly given to the Bank) to have the right but not the obligation to effect such
Insurances on behalf of the Borrower (and in case that the Vessel remains in port
for an extended period to effect port risks insurances at the cost of the Borrower
which, if paid by the Bank, shall be Expenses);
	 
	 	(d)	 	Transfer/Encumbrances
	 
	 	 	 	not without the prior written consent of the Bank sell or otherwise dispose of the
Vessel or any share therein or create or agree to create or permit to subsist any
Encumbrance over the Vessel (or any share or interest therein) other than Permitted
Encumbrances;
	 
	 	(e)	 	Not imperil Flag, Ownership, Insurances
	 
	 	 	 	ensure that the Vessel is maintained and trades in conformity with the laws of the
Flag State, of its owning company or of the nationality of the officers of the
Vessel, the requirements of the Insurances and nothing is done or

33

 

	 	 	 	permitted to be done which could endanger the flag of the Vessel or its unencumbered
(other than Permitted Encumbrances) ownership or its Insurances;

	 	(f)	 	Mortgage Covenants
	 
	 	 	 	always comply with all the covenants provided for in the Mortgage and in any
accompanying Deed of Covenant;
	 
	 	(g)	 	Charter
	 
	 	 	 	(save for the Charterparty) not enter into a charterparty, contract of
affreightment, agreement or related document in respect of the employment of the
Vessel (i) on demise charterparty or (ii) without the prior written consent of the
Bank, for a period for more than twelve (12) months or below the market rate
prevailing at the time when the Vessel is fixed in or on terms which are not in
accordance with the commercial practice prevailing at the relevant time;
	 
	 	(h)	 	Assignment of Earnings
	 
	 	 	 	not assign or agree to assign otherwise than to the Bank the Earnings or any part
thereof; and

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

	 	(i)	 	of any Environmental Claim for an amount or amounts in
aggregate exceeding $500,000 made against the Vessel, any Relevant Ship and/or
her respective owner; and
	 
	 	(ii)	 	upon becoming aware of any incident which may give rise to an
Environmental Claim and to keep the Bank advised in writing of the Borrower’s
response to such Environmental Claim on such regular basis and in such detail
as the Bank shall require;

	8.8	 	Observance of Covenants

	 	(a)	 	Use of the Loan
	 
	 	 	 	use the Loan exclusively for the purpose specified in this Agreement;
	 
	 	(b)	 	Compliance with Covenants
	 
	 	 	 	duly and punctually perform each of the obligations expressed to be assumed by it
under this Agreement and the other Security Documents;
	 
	 	(c)	 	Payment on Demand
	 
	 	 	 	pay to the Bank on demand any sum of money which is payable by the Borrower to the
Bank under this Agreement but in respect of which it is not specified in any other
Clause when it is due and payable; and

34

 

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

	8.9	 	Validity of Securities — Taxes etc.

	 	(a)	 	Validity
	 
	 	 	 	ensure and procure that all governmental or other consents required by law and/or
any other steps required for the validity, enforceability and legality of this
Agreement and the other Security Documents are maintained in full force and effect
and/or appropriately taken;
	 
	 	(b)	 	Earnings
	 
	 	 	 	ensure and procure that, unless and until directed by the Bank otherwise (i) all the
Earnings of the Vessel shall be paid to the Earnings Account and (ii) the persons
from whom the Earnings are from time to time due are irrevocably instructed to pay
them to such account in the name of the Borrower as shall be from time to time
agreed by the Bank in accordance with the provisions hereof and of the relevant
Security Documents;
	 
	 	(c)	 	Taxes
	 
	 	 	 	pay all Taxes, assessments and other governmental charges when the same fall due,
except to the extent that the same are being contested in good faith by appropriate
proceedings and adequate reserves have been set aside for their payment if such
proceedings fail; and
	 
	 	(d)	 	Additional Documents
	 
	 	 	 	from time to time and within ten (10) days after the Bank’s request execute and
deliver to the Bank or procure the execution and delivery to the Bank of all such
documents as shall be deemed desirable at the reasonable discretion of the Bank for
giving full effect to this Agreement, and for perfecting, protecting the value of or
enforcing any rights or securities granted to the Bank under any one or more of this
Agreement, the other Security Documents and any other documents executed pursuant
hereto or thereto and in case that any conditions precedent (with the Bank’s
consent) have not been fulfilled prior to the Drawdown, such conditions shall be
complied with within fourteen (14) days of Drawdown (unless the Bank agrees
otherwise in writing) and failure to comply with this covenant shall be an Event of
Default.

	8.10	 	Excess Cash

	 	(a)	 	on the last day of each Relevant Period transfer to the Retention Account an
amount equal to fifty percent (50%) of the Excess Earnings for such Relevant Period and
such amount shall be applied by the Bank (and the Bank is hereby irrevocably and
unconditionally authorised so to do) in or towards payment of the Balloon Instalment
until the amount of the Balloon Instalment be reduced to $2,500,000 (Two million five
hundred thousand Dollars), whereupon the obligation of the Borrower to cause the
transfer of the Excess Earnings to the Retention Account shall cease.
	 
	 	(b)	 	For the purpose of this Clause 8.10(a):

35

 

	 	 	 	“Excess Earnings” means as at any Relevant Period, an amount calculated in
accordance with the formula: Excess Earnings =Total Income - (Operating Expenses
for the Relevant Period plus Debt Service);
	 
	 	 	 	“Total Income” means the total income of the Vessel for the Relevant Period less
brokerage fees and commissions and withholding taxes (if any);
	 
	 	 	 	“Debt Service” means payments of principal and interest made or due pursuant to this
Agreement in the Relevant Period (including sums standing to the credit of the
Retention Account); and
	 
	 	 	 	“Relevant Period” means each successive period of twelve (12) months the first
commencing on 1st January, 2007.

	8.11	 	Covenants for the Security Parties
	 
	 	 	Ensure and procure that all other Security Parties and each of them duly and punctually
comply, with the covenants in Clauses 8.1 to 8.10 which are applicable to them mutatis
mutandis.
	 
	8.12	 	Compliance with the ISM Code
	 
	 	 	Procure that the Approved Manager and any Operator:

	 	(a)	 	will comply with and ensure that the Vessel and any Operator by no later than
the Drawdown Date complies with the requirements of the ISM Code, including (but not
limited to) the maintenance and renewal of valid certificates pursuant thereto
throughout the Security Period;
	 
	 	(b)	 	immediately inform the Bank if there is any threatened or actual withdrawal of
the Borrower’s, the Approved Manager’s or an Operator’s DOC or the SMC in respect of
the Vessel; and
	 
	 	(c)	 	promptly inform the Bank upon the issue to the Borrower, the Approved Manager
or any Operator of a DOC and to the Vessel of an SMC or the receipt by the Borrower,
the Approved Manager or any Operator of notification that its application for the same
has been realised.

	8.12	 	ISPS Code Compliance

	 
	 	 	Procure that the Approved Manager or any Operator will:

	 	(a)	 	maintain at all times a valid and current ISSC respect of the Vessel;
	 
	 	(b)	 	immediately notify the Bank in writing of any actual or threatened
withdrawal, suspension, cancellation or modification of the ISSC in respect of the
Vessel; and

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

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	 	 	There shall be an Event of Default whenever an event described in Clauses 9.1 to 9.7 occurs:

	9.1	 	Non Performance of Obligations

	 	(a)	 	the Borrower or any other Security Party fails to pay any sum due from the
Borrower or, as the case may be such Security Party, under this Agreement and/or any of
the other Security Documents at the time, in the currency and in the manner stipulated
herein and/or any of the other Security Documents, or, in the case of any sum payable
on demand, within five (3) Banking Days of such demand; or
	 
	 	(b)	 	the Borrower or any other Security Party fails to observe and perform any one
or more of the covenants, terms or obligations contained in this Agreement and/or any
other Security Document relating to the Insurances; or
	 
	 	(c)	 	the Borrower or any other Security Party commits any breach of or omits to
observe any of the covenants, terms, obligations or undertakings under this Agreement
and/or any of the other Security Documents (other than failure to pay any sum when due
or to comply with any obligation concerning the Insurances) and, in respect of any such
breach or omission which in the opinion of the Bank is capable of remedy, such action
as the Bank may require shall not have been taken within seven (7) days of the Bank
notifying the Borrower and/or the relevant Security Party of such required action to
remedy the breach or omission; or

	9.2	 	Events affecting the Security Parties

	 	(a)	 	any Security Party is adjudicated or found bankrupt or insolvent or any
judgement or order is made by any competent court or resolution passed or petition
(which is not in the reasonable opinion of the Bank frivolous and is not being
contested in good faith by such Security Party) presented for the winding-up or
dissolution of any Security Party or for the appointment of a liquidator, trustee,
receiver, administrator or conservator of the whole or any part of the undertakings,
assets, rights or revenues of any Security Party; or
	 
	 	(b)	 	any Security Party becomes or is deemed to be insolvent or suspends payment of
its debts or is (or is deemed to be) unable to or admits inability to pay its debts as
they fall due or proposes or enters into any composition, compromise or other
arrangement for the benefit of its creditors generally or good faith proceedings are
commenced in relation to any Security Party under any law, regulation or procedure
relating to reconstruction or readjustment of debts; or
	 
	 	(c)	 	an encumbrancer takes possession or a receiver or similar officer is appointed
of the whole or any part of the undertakings, assets, rights or revenues of any
Security Party or a distress, execution, sequestration or other process is levied or
enforced upon or sued out against any of the undertakings, assets, rights or revenues
of any Security Party and is not discharged within fifteen (15) days; or
	 
	 	(d)	 	all or a material part of the undertakings, assets, rights or revenues of any
Security Party are seized, nationalised, expropriated or compulsorily acquired by or
under the authority of any government; or
	 
	 	(e)	 	any event occurs or proceeding is taken with respect to any Security Party in
any jurisdiction to which it is subject which has an effect equivalent or similar to
any of the events mentioned in sub-Clauses 9.2(a) to 9.2(d); or

37

 

	 	(f)	 	any Security Party suspends or ceases or threatens to suspend or cease to carry
on its business; or
	 
	 	(g)	 	there occurs, in the reasonable opinion of the Bank, a material adverse change
in the financial condition of any Security Party; or
	 
	 	(h)	 	any other event occurs or circumstances arise which, in the reasonable opinion
of the Bank, materially and adversely affects either (i) the ability of any Security
Party to perform all or any of its obligations under or otherwise to comply with the
terms of this Agreement and/or any of the other Security Documents, or (ii) the
security created by this Agreement and/or any of the Security Documents; or
	 
	 	(i)	 	there is any material change in the beneficial ownership of the shares in the
Borrower and/or in any other corporate Security Party; or
	 
	 	(j)	 	a meeting is convened by any Security Party for the purpose of passing any
resolution to purchase, reduce or redeem any of its share capital; or

	9.3	 	Representations Incorrect
	 
	 	 	any representation or warranty made or deemed to be made or repeated by or in respect of any
Security Party in or pursuant to this Agreement or any of the other Security Documents or in
any notice, certificate or statement referred to in or delivered under this Agreement or any
of the other Security Documents is or proves to have been incorrect in any material respect;
or
	 
	9.4	 	Cross-default
	 
	 	 	any Indebtedness of the Security Parties (or any of them) and/or any other member of the
Group is not paid when due or becomes due and payable, or any creditor of the Security
Parties (or any of them) and/or any other member of the Group becomes entitled to declare
any such Indebtedness due and payable prior to the date when it would otherwise have become
due, or any guarantee or indemnity given or any obligation or covenant undertaken or
agreement made by the Security Parties (or any of them) and/or any other member of the Group
in respect of Indebtedness is not honoured when due unless the relevant Security Party
and/or the relevant member of the Group shall have satisfied the Lenders that such
Indebtedness will not affect or prejudice in any way such Security Party’s and/or the
relevant member’s of the Group’s ability to pay its debts as they fall due; or
	 
	9.5	 	Events affecting the Security Documents

	 	(a)	 	this Agreement or any of the other Security Documents shall at any time and for
any reason become invalid or unenforceable or otherwise cease to remain in full force
and effect, or if the validity or enforceability of any of the Security Documents shall
at any time and for any reason be contested by any party thereto (other than the Bank),
or if any such party shall deny that it has any, or any further, liability thereunder
or it becomes impossible or unlawful for the Borrower to fulfil any of its covenants
and obligations contained in this Agreement or any of the Security Documents or for the
Bank to exercise the rights vested in it thereunder or otherwise; or
	 
	 	(b)	 	any consent, authorisation, licence or approval of, or registration with or
declaration to, governmental or public bodies or authorities or courts required by the
Borrower to authorise or otherwise in connection with, the execution, delivery,
validity, enforceability or admissibility in evidence of this Agreement and/or any of
the other Security Documents or the performance by

38

 

	 	 	 	the Borrower of its obligations under this Agreement and/or any of the other
Security Documents is modified in a manner unacceptable to the Bank or is not
granted or is revoked or terminated or expires and is not renewed or otherwise
ceases to be in full force and effect; or

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

	9.6	 	Events concerning the Security Parties

	 	(a)	 	any Security Party (other than the Borrower) fails to pay any sum due from it
under this Agreement and/or any of the Security Documents when due, or, in the case of
any sum payable on demand, within three (3) Banking Days of demand; or
	 
	 	(b)	 	any Security Party (other than the Borrower) fails to observe and perform any
one or more of the covenants, terms or obligations contained in this Agreement
(including Schedule 2) and/or the other Security Documents relating to the Insurances;
or
	 
	 	(c)	 	any Security Party (other than the Borrower) commits any breach of or omits to
observe any of the covenants, terms, obligations or undertakings expressed to be
assumed by it under this Agreement and/or any of the Security Documents (other than
failure to pay any sum when due or to observe or perform obligations relating to the
Insurances) and, in respect of any such breach or omission which in the opinion of the
Bank is capable of remedy, such action as the Bank may require shall not have been
taken within seven (7) days of the Bank notifying the relevant Security Party, of such
required action to remedy the breach or omission; or
	 
	 	(d)	 	any representation or warranty made or deemed to be made or repeated by or in
respect of any Security Party (other than the Borrower) in or pursuant to this
Agreement or any of the other Security Documents or in any notice, certificate or
statement referred to in or delivered under this Agreement or any of the other Security
Documents is or proves to have been incorrect in any material respect; or
	 
	 	(e)	 	any of the events referred to in Clauses 9.2 to 9.5 occurs (amended as
appropriate) in relation to any Security Party (other than the Borrower); or
	 
	 	(f)	 	death or any legal disability or incapacity of the Personal Guarantor or any
steps are taken or legal proceedings initiated for the Personal Guarantor to be
adjudicated or found bankrupt or any event analogous thereto occurs in relation to the
Personal Guarantor in any jurisdiction or any of the events referred to in Clauses 9.2,
9.3, 9.4 or 9.5 occurs in relation to the Personal Guarantor.

	9.7	 	Events concerning the Vessel

	 	(a)	 	the Vessel becomes a Total Loss or suffers damage or is involved in an incident
which in the reasonable opinion of the Bank may result in the Vessel being subsequently
determined to be a Total Loss and the insurance indemnity is not paid by the insurers
to the Bank under the General Assignment within a period of one hundred fifty (150)
days from the earlier of: (i) the date such Total Loss occurred and (ii) the date on
which the incident which in the reasonable opinion of the Bank may result in the Vessel
being subsequently determined to be a Total Toss has occurred; or

39

 

	 	(b)	 	the Vessel ceases to be managed by the Approved Manager (for any reason other
than the reason of a Total Loss or sale of the Vessel) with the approval of the Bank,
and the Borrower fails to appoint an Approved Manager within seven (7) days after the
termination of the Management Agreement with the previous Approved Manager; or
	 
	 	(c)	 	the Vessel is arrested, confiscated, seized, taken in execution, impounded,
forfeited, detained in exercise or purported exercise of any possessory lien or other
claim and the Owner shall fail to procure the release of the Vessel within a period of
fourteen (14) days thereafter; or
	 
	 	(d)	 	the registration of the Vessel under the laws and flag of the Flag State is
cancelled or terminated without the prior written consent of the Bank or, if the Vessel
is only provisionally registered on the Drawdown Date and is not permanently registered
under the laws and flag of the Flag State at least ninety (90) days prior to the
deadline for completing such permanent registration;
	 
	 	(e)	 	the Flag State of the Vessel becomes involved in hostilities or civil war or
there is a seizure of power in such Flag State by unconstitutional means if, in any
such case, such event could in the reasonable opinion of the Bank reasonably be
expected to have a material adverse effect on the security constituted by any of the
Security Documents and alternative arrangements satisfactory to the Bank have not been
made promptly upon the Bank’s request; or
	 
	 	(f)	 	the Borrower or any other person fails or omits to comply with any requirements
of the protection and indemnity association or other insurer with which the Vessel 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 jurisdiction where the
Vessel operates or trades) is or may be liable to cancellation, qualification or
exclusion at any time; or
	 
	 	(g)	 	(without prejudice to the generality of sub-Clauses 9.1(b) and (c)) for any
reason whatsoever the provisions of Clause 8.11 are not complied with and/or the Vessel
ceases to comply with the ISM Code; or
	 
	 	(h)	 	(without prejudice to the generality of sub-Clauses 9.1(b) and (c)) for any
reason whatsoever the provisions of Clause 8.12 are not complied with and/or the Vessel
ceases to comply with the ISPS Code; or

	9.8	 	Environmental Events

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

40

 

	 	 	 	indemnity risks (including oil pollution risks) to the effect that any cover in
relation to the Vessel (including without limitation, liability for Environmental
Claims arising in jurisdictions where the Vessel operates or trades) is or may be
liable to cancellation, qualification or exclusion at any time; or

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

	 	(a)	 	by notice to the Borrower declare that the obligation of the Bank to make the
Commitment available shall be terminated, whereupon the Commitment shall be reduced to
zero forthwith; and/or
	 
	 	(b)	 	by notice to the Borrower declare that the Loan and all interest and commitment
commission accrued and all other sums payable under this Agreement and the other
Security Documents have become due and payable, whereupon the same shall, immediately
or in accordance with the terms of such notice, become due and payable without any
further diligence, presentment, demand of payment, protest or notice or any other
procedure from the Bank which are expressly waived by the Borrower; and/or
	 
	 	(c)	 	put into force and exercise all or any of the rights, powers and remedies
possessed by it under this Agreement and/or under any other Security Document and/or as
mortgagee of the Vessel, mortgagee, chargee or assignee or as the beneficiary of any
other property right or any other security (as the case may be) over the assets charged
or assigned to it under the Security Documents or otherwise (whether at law, by virtue
of any of the Security Documents or otherwise).

	9.10	 	Insolvency Events of Default
	 
	 	 	If an event occurs in respect of the Borrower or the other Security Parties of the type
described in sub-Clauses 9.2(a) to (e) (except (i) in the case when a petition was presented
or proceedings were commenced or a suit or writ were issued by a third party and the
Borrower or the relevant Security Party is defending itself in bona fide and (ii) in the
case that such events mentioned in Clause 9.2 relate to only a part of the undertakings,
assets, rights or revenues which in the opinion of the Bank does not affect the ability of
the Borrower or the relevant Security Party to perform its respective obligations under this
Agreement and/or the other Security Documents) the obligation of the Bank to make the
Commitment available shall terminate immediately upon receipt by the Bank of the relevant
information (as such receipt shall be conclusively certified by a certificate of the Bank)
and all amounts payable under sub-Clause 9.9(b) above shall become immediately due and
payable without any notice or other formality which is hereby expressly waived by the
Borrower.
	 
	9.11	 	Proof of Default
	 
	 	 	It is agreed that (i) the non-payment of any sum of money in time will be proved
conclusively by mere passage of time and (ii) the occurrence of this (non payment) shall be
proved conclusively by a mere written statement of the Bank (save for manifest error).
	 
	9.12	 	Exclusion of Bank’s liability
	 
	 	 	Neither the Bank nor any receiver or manager appointed by the Bank, shall have any liability
to the Borrower or any other Security Party:

41

 

	 	(a)	 	for any loss caused by an exercise of rights under, or enforcement of an
Encumbrance created by, a Security Document or by any failure or delay to exercise such
a right or to enforce such an Encumbrance; or
	 
	 	(b)	 	as mortgagee in possession or otherwise, for any income or principal amount
which might have been produced by or realised from any asset comprised in such an
Encumbrance or for any reduction (however caused) in the value of such an asset,

	 	 	except that this does not exempt the Bank or a receiver or manager from liability for losses
shown to have been caused by the wilful misconduct of the Bank’s own officers and employees
or (as the case may be) such receiver’s or manager’s own partners or employees.
	 
	10.	 	INDEMNITIES — EXPENSES — FEES
	 
	10.1	 	Indemnity
	 
	 	 	The Borrower shall on demand (and it is hereby expressly undertaken by the Borrower to)
indemnify the Bank, without prejudice to any of the other rights of the Bank under any of
the Security Documents, against any loss or expense which the Bank shall certify as
sustained or incurred as a consequence of:

	 	(a)	 	any default in payment by any of the Security Parties of any sum under any of
the Security Documents when due;
	 
	 	(b)	 	the occurrence of any Event of Default;
	 
	 	(c)	 	any prepayment of the Loan or part thereof being made under Clauses 4.2(b) and
4.3, 8.5(c) or 12 or any other repayment of the Loan or part thereof being made
otherwise than on an Interest Payment Date relating to the part of the Loan prepaid or
repaid; or
	 
	 	(d)	 	the Commitment not being advanced for any reason (excluding any default by the
Bank) after the Drawdown Notice has been given,

	 	 	including, in any such case, but not limited to, any loss or expense sustained or incurred
in maintaining or funding the Loan or any part thereof or in liquidating or re-employing
deposits from third parties acquired to effect or maintain the Loan or any part thereof.
	 
	10.2	 	Expenses
	 
	 	 	The Borrower shall (and it is hereby expressly undertaken by the Borrower to) pay to the
Bank on demand:

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

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	 	(b)	 	Enforcement expenses
	 
	 	 	 	all expenses (including legal and out-of-pocket expenses) incurred by the Bank in
contemplation of, or otherwise in connection with, the enforcement of, or
preservation of any rights under, this Agreement and/or any of the other Security
Documents, or otherwise in respect of the moneys owing under this Agreement and/or
any of the other Security Documents or the contemplation or preparation of the
above, whether they have been effected or not;
	 
	 	(c)	 	MII costs
	 
	 	 	 	reimburse the Bank on demand for any and all costs incurred by the Bank (as
conclusively certified by the Bank) in effecting and keeping effected the MII, which
the Bank may at any time effect on such terms and with such insurers as shall from
time to time be determined by the Bank; and
	 
	 	(d)	 	Other expenses
	 
	 	 	 	any and all other Expenses.

	 	 	All expenses payable pursuant to this Clause 10.2 shall be paid together with value added
tax (if any) thereon.
	 
	10.3	 	Stamp duty
	 
	 	 	The Borrower shall pay any and all stamp, registration and similar taxes or charges
(including those payable by the Bank) imposed by governmental authorities in relation to
this Agreement and any of the other Security Documents, and shall indemnify the Bank against
any and all liabilities with respect to, or resulting from delay or omission on the part of
the Borrower to pay such stamp taxes or charges.
	 
	10.4	 	Environmental Indemnity
	 
	 	 	The Borrower shall indemnify the Bank on demand and hold the Bank harmless from and against
all costs, expenses, payments, charges, losses, demands, liabilities, actions, proceedings
(whether civil or criminal) penalties, fines, damages, judgements, orders, sanctions or
other outgoings of whatever nature which may be suffered, incurred or paid by, or made or
asserted against the Bank at any time, whether before or after the repayment in full of
principal and interest under this Agreement, relating to, or arising directly or indirectly
in any manner or for any cause or reason out of an Environmental Claim made or asserted
against the Bank.
	 
	10.5	 	Currencies
	 
	 	 	If any sum due from the Borrower under any of the Security Documents or any order or
judgement given or made in relation hereto has to be converted from the currency (the “first
currency”) in which the same is payable under the relevant Security Document or under such
order or judgement into another currency (the “second currency”) for the purpose of (i)
making or filing a claim or proof against the Borrower or any other Security Party, as the
case may be or (ii) obtaining an order or judgement in any court or other tribunal or (iii)
enforcing any order or judgement given or made in relation to any of the Security Documents,
the Borrower shall (and it is hereby expressly undertaken by the Borrower to) indemnify and
hold harmless the Bank from and against any loss suffered as a result of any difference
between (a) the rate of exchange used for such purpose to convert the sum in question from
the first currency into the second currency and (b) the rate or rates of exchange at which
the Bank may in the ordinary course of business purchase the first currency with the second
currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of

43

 

	 	 	any such order, judgement, claim or proof. The term “rate of exchange” includes any premium
and costs of exchange payable in connection with the purchase of the first currency with the
second currency.

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

	 	(a)	 	Express authority is hereby given by the Borrower to the Bank to accept (at the
sole discretion of the Bank) all tested or untested communications given by facsimile,
telex, cable or otherwise, regarding any or all of the notices, requests, instructions
or other communications under this Agreement, subject to any restrictions imposed by
the Bank relating to such communications including, without limitation (if so required
by the Bank), the obligation to confirm such communications by letter.
	 
	 	(b)	 	The Borrower shall recognise any and all of the said notices, requests,
instructions or other communications as legal, valid and binding, when these notices,
requests, instructions or communications come from the telex and fax numbers mentioned
in Clause 15.1 or any other telex or fax usually used by it or its managing company.
	 
	 	(c)	 	The Borrower hereby assumes full responsibility for the execution of the said
notices, requests, instructions or communications by the Bank and promises and
recognises that the Bank shall not be held responsible for any loss, liability or
expense that may result from such notices, requests, instructions or other
communications. It is hereby undertaken by the Borrower to indemnify in full the Bank
from and against all actions, proceedings, damages, costs, claims, demands, expenses
and any and all direct and/or indirect losses which the Bank may suffer, incur or
sustain by reason of the Bank following such notices, requests, instructions or
communications.
	 
	 	(d)	 	With regard to notices, requests, instructions or communications issued by
electronic and/or mechanical processes (e.g. by facsimile, telex), the risk of
equipment malfunction, including, without limitation, paper shortage, transmission
errors, omissions and distortions is assumed fully and accepted by the Borrower, save
in case of Bank’s gross misconduct.
	 
	 	(e)	 	The risks of misunderstandings and errors resulting from notices, requests,
instructions or communications being given as mentioned above, are for the Borrower and
the Bank will be indemnified in full pursuant to this Clause save in case of Bank’s
gross misconduct.
	 
	 	(f)	 	The Bank shall have the right to ask the Borrower to furnish any information
the Bank may require to establish the authority of any person purporting to act on
behalf of the Borrower for these notices, requests, instructions or communications but
it is expressly agreed that there is no obligation for the Bank to do so. The Bank
shall be fully protected in, and the Bank shall incur

44

 

	 	 	 	no liability to the Borrower for acting upon the said notices, requests,
instructions or communications which were believed by the Bank in good faith to have
been given by the Borrower or by any of its authorised representative(s).

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

	10.8	 	Arrangement Fee -Commitment Commission

	 	(a)	 	As an inducement for the Bank to enter into this Agreement the Borrower shall
pay not later than the date hereof an arrangement fee in the amount of Fifty nine
thousand Dollars ($59,000); and
	 
	 	(b)	 	The Borrower shall pay to the Bank in arrears on each of the dates falling at
three monthly intervals after the date of acceptance of the Commitment Letter (i.e. the
10th September, 2006) until the earlier of (a) the last day of the
Availability Period (b) the Drawdown Date and (c) the date of cancellation of the
Commitment in full by the Borrower (the “Commitment Commission Period”) commitment
commission at the rate of 0.50% per annum on the daily undrawn and uncancelled amount
of the Commitment, computed from the date of acceptance of the Commitment Letter (in
the case of the first payment of commission) and from the date of the preceding payment
of commission (in the case of each subsequent payment) until the last day of the
Commitment Commission Period.

	 	 	The arrangement fee and commitment commission referred to in this Clause 10.8 are not
refundable and shall be payable by the Borrower to the Bank whether or not any part of the
Commitment is ever advanced.
	 
	11.	 	SECURITY, APPLICATION, SET-OFF AND ACCOUNTS
	 
	11.1	 	Securities
	 
	 	 	As security for the due and punctual repayment of the Loan and payment of interest thereon
as provided in this Agreement and of all other Outstanding Indebtedness, the Borrower shall
ensure and procure that the following Security Documents are duly executed and, where
required, registered in favour of the Bank in form and substance satisfactory to the Bank at
the time specified herein or otherwise as required by the Bank and ensure that such security
consists, on the Drawdown Date in respect of the Loan, of:

	 	(a)	 	the Mortgage duly registered over the Vessel through the Registry;
	 
	 	(b)	 	the General Assignment;
	 
	 	(c)	 	the Personal Guarantee;
	 
	 	(d)	 	the Corporate Guarantee;
	 
	 	(e)	 	the Accounts Pledge Agreement;

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	 	(f)	 	the Shares Pledge Agreement;
	 
	 	(g)	 	the Manager’s Undertaking; and
	 
	 	(h)	 	any Charterparty Assignment.

	11.2	 	Maintenance of Securities
	 
	 	 	It is hereby undertaken by the Borrower that the Security Documents shall both at the date
of execution and delivery thereof and so long as any moneys are owing and/or due under this
Agreement or under the other Security Documents be valid and binding obligations of the
respective Security Parties thereto and rights of the Bank enforceable in accordance with
their respective terms and that they will, at the expense of the Borrower, execute, sign,
perfect and do any and every such further assurance, document, act, omission or thing as in
the opinion of the Bank may be necessary or desirable for perfecting the security
contemplated or constituted by the Security Documents.
	 
	11.3	 	Application of funds
	 
	 	 	All moneys received by the Bank under or pursuant to any of the Security Documents and
expressed to be applicable in accordance with this Clause 11.3 shall be applied by the Bank
in the following manner:

	 	(a)	 	Firstly in or towards payment of Expenses and all sums other than principal or
interest which may be due to the Bank under this Agreement and the other Security
Documents or any of them at the time of application;
	 
	 	(b)	 	Secondly in or towards payment of any default interest;
	 
	 	(c)	 	Thirdly in or towards payment of any arrears of interest (other than default
interest) due in respect of the Loan or any part thereof;
	 
	 	(d)	 	Fourthly in or towards repayment of the Loan whether the same is due and
payable or not;
	 
	 	(e)	 	Fifthly in or towards payment to the Bank for any loss suffered by reason of
any such payment in respect of principal not being effected on an Interest Payment Date
relating to the part of the Loan repaid;
	 
	 	(f)	 	Sixthly the surplus (if any) shall be paid to the Borrower, or to whomsoever
else shall be entitled to receive such surplus.

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

	 	(a)	 	to apply any credit balance standing upon any account of the Borrower with any
branch of the Bank and in whatever currency in or towards satisfaction of any sum due
to the Bank from the Borrower under this Agreement and/or any of the other Security
Documents;
	 
	 	(b)	 	in the name of the Borrower and/or the Bank to do all such acts and execute all
such documents as may be necessary or expedient to effect such application; and

46

 

	 	(c)	 	to combine and/or consolidate all or any accounts in the name of the Borrower
with the Bank.
	 
	 	(d)	 	For all or any of the above purposes authority is hereby given to the Bank to
purchase with the moneys standing to the credit of any such account or accounts such
other currencies as may be necessary to effect such application. The Bank shall not be
obliged to exercise any right given by this Clause.

	11.5	 	Earnings Account — Retention Account

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

	 	(i)	 	first: in payment of any and all sums whatsoever due
and payable to the Bank hereunder (such sums to be paid in such order as the
Bank may in its sole discretion elect);
	 
	 	(ii)	 	second: during each month of the Security Period (but
by no later than, in the case of the first such month, the date falling thirty
(30) days after the Drawdown Date and, in the case of each subsequent month,
the same date of that month), the Borrower shall cause to be transferred from
the Earnings Account to the Retention Account of the aggregate amount of the
Earnings of the Vessel received in the Earnings Account during the preceding
month:

	 	aa)	 	one sixth (1/6th) of the amount of
the Repayment Instalment specified in Clause 4.1 falling due for
payment on the next following Repayment Date; and
	 
	 	bb)	 	the relevant fraction of the amount of interest
on the Loan falling due on the next due date for payment of interest
under this Agreement.

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

	 	(iii)	 	thirdly: any balance shall be released to the
Borrower.

	 	(b)	 	If the aggregate amount of the Earnings of the Vessel received in the Earnings
Account is insufficient in any month for the required transfer to be made from the
Earnings Account to the Retention Account in accordance with Clause 11.5(a), the
Borrower shall make up the amount of such insufficiency on demand from the Bank, but,
without prejudice to its right to make such demand, the Bank may elect to make up the
whole or any part of such insufficiency by increasing the amount of any transfer to be
made in accordance with Clause 11.5(a)(ii) from the aggregate amount of such Earnings
received in the next or subsequent months.
	 
	 	(c)	 	Until the occurrence of an Event of Default (or an event which, with the giving
of notice and/or lapse of time or other applicable condition, might

47

 

	 	 	 	constitute an Event of Default), the Bank shall on each Repayment Date and on each
due date for the payment of interest under this Agreement apply in accordance with
the provisions of Clause 11.5 (a) the relevant part of the balance then standing to
the credit of the Retention Account as shall be required to make payment of the
Repayment Instalment specified in Clause 4.1 then due under the terms of this
Agreement or payment of interest then due under the terms of this Agreement and such
transfer shall constitute a pro tanto satisfaction of the Borrower’s obligations to
pay such repayment instalment or interest (as the case may be) then due under this
Agreement.

	 	(d)	 	Any amounts for the time being standing to the credit of the Retention Account
shall bear interest at the rate from time to time offered by the Bank to its customers
for Dollar deposits of similar amounts and for periods similar to those for which such
amounts are likely to remain standing to the credit of the Retention Account. Such
interest shall, provided that the foregoing provisions of this Clause 11.5
shall have been complied with and provided that no Event of Default (or event
which, with the giving of notice and/or lapse of time or other applicable condition,
might constitute an Event of Default) shall have occurred, be released to the Borrower.
	 
	 	(e)	 	Nothing herein contained shall be deemed to affect the absolute obligation of
the Borrowers to pay interest on and to repay the Loan as provided in Clauses 3 and 4
or shall constitute a manner or postponement thereof.
	 
	 	(f)	 	The Borrower hereby irrevocably authorises the Bank to make from the Earnings
Account any and all above payments and repayments as and when the same fall due or at
any time thereafter.
	 
	 	(g)	 	The Borrower will comply with any written requirement of the Bank from time to
time as to the location or re-location of the Earnings Account and the Retention
Account (or either of them) and will from time to time enter into such documentation as
the Bank may require in order to create or maintain in favour of the Bank an
Encumbrance in the Earnings Account and the Retention Account, all at cost and expense
of the Borrowers.
	 
	 	(h)	 	The Borrower hereby covenants with the Bank that the Earnings Account, the
Retention Account and any moneys therein shall not be charged, assigned, transferred or
pledged nor shall there be granted by the Borrower or suffered to arise any third party
rights over or against the whole or any part of the Earnings Account other than in
favour of the Bank.
	 
	 	(i)	 	The Earnings Account shall be operated in accordance with the Bank’s usual
terms and conditions (full knowledge of which the Borrower hereby acknowledges) and
subject to the Bank’s usual charges levied on such accounts and/or transactions
conducted on such accounts (as from time to time notified by the Bank to the Borrower).
	 
	 	(j)	 	The Borrower hereby warrants that sufficient monies to meet the next Repayment
Instalment plus interest thereon will be accumulated each and every month in the
Retention Account.
	 
	 	(k)	 	After the occurrence of an Event of Default the balance (if any) including any
accrued interest standing to the credit of the Earnings Account and the Retention
Account shall be applied in accordance with the provisions of Clause 11.3.
	 
	 	(l)	 	Upon payment in full of all principal, interest and all other amounts due to
the Bank under the terms of this Agreement and the other Security Documents,

48

 

	 	 	 	any balance then standing to the credit of the Retention Account and/or the Earnings
Account shall be released and paid to the Borrower or to whomsoever else may be
entitled to receive such balance.

	12.	 	UNLAWFULNESS, INCREASED COSTS
	 
	12.1	 	Unlawfulness
	 
	 	 	If any change in, or introduction of, any law, regulation or regulatory requirement or any
request of any central bank, monetary, regulatory or other authority or any order of any
court renders it unlawful or contrary to any such regulation, requirement, request or order
for the Bank to advance the Commitment or to maintain or fund the Loan, notice shall be
given promptly by the Bank to the Borrower whereupon the Commitment shall be reduced to zero
and the Borrower shall be obliged to prepay the Loan in accordance with such notice,
together with accrued interest thereon to the date of prepayment and all other sums payable
by the Borrower under this Agreement.
	 
	 	 	In any such event the Borrower and the Bank shall (as per the provisions of sub-Clause 3.6)
negotiate in good faith (but without incurring any legal obligations) with a view to
agreeing the terms for making the Loan available from another jurisdiction or providing the
Loan from alternative sources.
	 
	12.2	 	Change of circumstances
	 
	 	 	If any change in or in the interpretation of any applicable law or regulation, by any
government or governmental authority or agency, makes it unlawful for the Bank to maintain
or give effect to its obligations or to claim or receive any amount payable to the Bank
under this Agreement, then the Bank may serve written notice on the Borrower declaring its
obligations under this Agreement terminated in whole or in part, whereupon the same shall
terminate forthwith and the Borrower will immediately repay the Loan and accrued interest to
the date of prepayment together with all other Outstanding Indebtedness to the Bank pursuant
to the terms of the notice.
	 
	12.3	 	Increased Cost
	 
	 	 	If, as a result of (a) any change in or in the interpretation of any law, regulation or
official directive (whether or not having the force of law but, if not having the force of
law, with which the Bank habitually complies) — including (without limitation) those
relating to Taxation, capital adequacy, liquidity, reserve assets, cash ratio deposits and
special deposits or those resulting from the implementation of any amendment of the “1988
Basle convergence agreement” or any amendatory or substitute agreement thereof- by any
governmental authority in any country the laws or regulations of which are applicable on the
Bank, or (b) compliance by the Bank with any request from any applicable fiscal or monetary
authority (whether or not having the force of law but, if not having the force of law, with
which the Bank habitually complies) or (c) any other set of circumstances affecting the
Bank:

	 	(a)	 	the cost to the Bank of making the Commitment or any part thereof or
maintaining or funding the Loan is increased or an additional cost on the Bank is
imposed; and/or
	 
	 	(b)	 	subject the Bank to Taxes or the basis of Taxation (other than Taxes or
Taxation on the overall net income of the Bank) in respect of any payments to the Bank
under this Agreement or any of the other Security Documents is changed; and/or

49

 

	 	(c)	 	the amount payable or the effective return to the Bank under any of the
Security Documents is reduced; and/or
	 
	 	(d)	 	the Bank’s rate of return on its overall capital by reason of a change in the
manner in which it is required to allocate capital resources to the Bank’s obligations
under any of the Security Document is reduced; and/or
	 
	 	(e)	 	require the Bank to make a payment or forgo a return on or calculated by
references to any amount received or receivable by it under any of the Security
Documents is required; and/or
	 
	 	(f)	 	require the Bank to incur or sustain a loss (including a loss of future
potential profits) by reason of being obliged to deduct all or part of the Commitment
or the Loan from its capital for regulatory purposes,

	 	 	then and in each case (subject to Clause 12.6) the Borrower shall pay to the Bank, from time
to time, upon demand, such additional moneys as shall indemnify the Bank for any increased
or additional cost, reduction, payment, foregone return or loss whatsoever
	 
	12.4	 	Claim for increased cost
	 
	 	 	The Bank will promptly notify the Borrower of any intention to claim indemnification
pursuant to Clause 12.3 and such notification will be a conclusive and full evidence binding
on the Borrower as to the amount of any increased cost or reduction and the method of
calculating the same and the Borrower shall be allowed to rebut such evidence by any means
of evidence save for witness. A claim under Clause 12.3 may be made at any time and must be
discharged by the Borrowers within fifteen (15) days of demand. It shall not be a defense
to a claim by the Bank under this Clause 12.3 that any increased cost or reduction could
have been avoided by the Bank. Any amount due from the Borrower under Clause 12.3 shall be
due as a separate debt and shall not be affected by judgement being obtained for any other
sums due under or in respect of this Agreement.
	 
	12.5	 	Option to prepay
	 
	 	 	If any additional amounts are required to be paid by the Borrower to the Bank by virtue of
Clause 12.3, the Borrower shall be entitled, on giving the Bank not less than fourteen (14)
days prior notice in writing, to prepay the Loan and accrued interest thereon, together with
all other Outstanding Indebtedness, on the next Repayment Date. Any such notice, once given,
shall be irrevocable.
	 
	12.6	 	Exception
	 
	 	 	Nothing in Clause 12.3 shall entitle the Bank to receive any amount in respect of
compensation for any such liability to Taxes, increased or additional cost, reduction,
payment, foregone return or loss to the extent that the same is subject of an additional
payment under Clause 5.3.
	 
	13.	 	ASSIGNMENT, PARTICIPATION, LENDING BRANCH
	 
	13.1	 	Binding Effect
	 
	 	 	This Agreement shall be binding upon and inure to the benefit of the Bank and the Borrower
and their respective successors and permitted assigns.

50

 

	13.2	 	No Assignment by the Borrower
	 
	 	 	The Borrower and any other parties to the Security Documents other than the Bank may not
assign or transfer any of its rights and/or obligations under this Agreement or any of the
other Security Documents or any documents executed pursuant to this Agreement and/or the
other Security Documents.
	 
	13.3	 	Assignment by the Bank
	 
	 	 	The Bank may at any time (following consultation with the Borrower and adequate notice being
given to the Borrower and the other Security Parties but without the consent of the
Borrower), assign, transfer, or offer participation to any other bank or financial
institution, in whole or in part, or in any manner dispose of all or any of its rights
and/or obligations arising or accruing under this Agreement or any of the other Security
Documents or any documents executed pursuant to this Agreement and/or the other Security
Documents.
	 
	13.4	 	Documentation
	 
	 	 	If the Bank assigns, transfers or in any other manner grants participation in respect of all
or any part of its rights or benefits or transfers all or any of its obligations as provided
in this Clause 13 the Borrower undertakes, immediately on being requested to do so by the
Bank, to enter into and procure that each Security Party enters into such documents as may
be necessary or desirable to transfer to the assignee, transferee or participant all or the
relevant part of the interest of the Bank in the Security Documents and all relevant
references in this Agreement to the Bank shall thereafter be construed as a reference to the
Bank and/or assignee, transferee or participant of the Bank to the extent of their
respective interests and, in the case of a transfer of all or part of the obligations of the
Bank, the Borrower shall thereafter look only to the assignee, transferee or participant in
respect of that proportion of the obligations of the Bank under this Agreement assumed by
such assignee, transferee or participant. The Borrower hereby expressly consents to any
subsequent transfer of the rights and obligations of the Bank and undertakes that it shall
join in and execute such supplemental or substitute agreements as may be necessary to enable
the Bank to assign and/or transfer and/or grant participation in respect of its rights and
obligations to another branch or to one or more banks or financial institutions in a
syndicate or otherwise.
	 
	13.5	 	Disclosure of information
	 
	 	 	The Bank may with the consent of the Borrower (such consent not to be unreasonably withheld)
and the request for which shall be promptly responded to, disclose (on a confidential basis)
to a prospective assignee, substitute or transferee or to any other person who may propose
entering into contractual relations with the Bank in relation to this Agreement such
information about the Borrower and the other Security Parties as the Bank shall consider
appropriate.
	 
	13.6	 	Change of Lending Branch
	 
	 	 	The Bank shall be at liberty to transfer the Loan to any branch or branches, and upon
notification of any such transfer, the word “Bank” in this Agreement and in the other
Security Documents shall mean the Bank, acting through such branch or branches and the terms
and provisions of this Agreement and of the other Security Documents shall be construed
accordingly.
	 
	14.	 	MISCELLANEOUS
	 
	14.1	 	Cumulative Remedies

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	 	 	The rights and remedies of the Bank contained in this Agreement and the other Security
Documents are cumulative and not neither exclusive of each other nor of any other rights or
remedies conferred by law.
	 
	14.2	 	Waivers
	 
	 	 	No failure, delay or omission by the Bank to exercise any right, remedy or power vested in
the Bank under this Agreement and/or the other Security Documents or by law shall impair
such right or power, or be construed as a waiver of, or as an acquiescence in any default by
the Borrower, nor shall any single or partial exercise by the Bank of any power, right or
remedy preclude any other or further exercise thereof or the exercise of any other power,
right or remedy. In the event of the Bank on any occasion agreeing to waive any such right,
remedy or power, or consenting to any departure from the strict application of the
provisions of this Agreement or of any other Security Document, such waiver shall not in any
way prejudice or affect the powers conferred upon the Bank under this Agreement and the
other Security Documents or the right of the Bank thereafter to act strictly in accordance
with the terms of this Agreement and the other Security Documents. No modification or
waiver by the Bank of any provision of this Agreement or of any of the other Security
Documents nor any consent by the Bank to any departure therefrom by any Security Party shall
be effective unless the same shall be in writing and then shall only be effective in the
specific case and for the specific purpose for which given. No notice to or demand on any
such party in any such case shall entitle such party to any other or further notice or
demand in similar or other circumstances.
	 
	14.3	 	Integration of Terms
	 
	 	 	This Agreement contains the entire agreement of the parties and its provisions supersede the
provisions of the Commitment Letter (save for the provisions thereof which relate to fees)
any and all other prior correspondence and oral negotiation by the parties in respect of the
matters regulated by this Agreement.
	 
	14.4	 	Amendments
	 
	 	 	This Agreement and any other Security Documents shall not be amended or varied in their
respective terms by any oral agreement or representation or in any other manner other than
by an instrument in writing of even date herewith or subsequent hereto executed by or on
behalf of the parties hereto or thereto.
	 
	14.5	 	Invalidity of Terms
	 
	 	 	In the event of any provision contained in one or more of this Agreement, the other Security
Documents and any other documents executed pursuant hereto or thereto being invalid, illegal
or unenforceable in any respect under any applicable law in any jurisdiction whatsoever,
such provision shall be ineffective as to that jurisdiction only without affecting the
remaining provisions hereof or thereof. If, however, this event becomes known to the Bank
prior to the drawdown of the Commitment or of any part thereof the Bank shall be entitled to
refuse drawdown until this discrepancy is remedied. In case that the invalidity of a part
results in the invalidity of the whole Agreement, it is hereby agreed that there will exist
a separate obligation of the Borrower for the prompt payment to the Bank of all the
Outstanding Indebtedness. Where, however, the provisions of any such applicable law may be
waived, they are hereby waived by the parties hereto to the full extent permitted by the law
to the intent that this Agreement, the other Security Documents and any other documents
executed pursuant hereto or thereto shall be deemed to be valid binding and enforceable in
accordance with their respective terms.
	 
	14.6	 	Inconsistency of Terms

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	 	 	In the event of any inconsistency between the provisions of this Agreement and the
provisions of any other Security Document the provisions of this Agreement shall prevail.
	 
	14.7	 	Language and genuineness of documents

	 	(a)	 	Language
	 
	 	 	 	All certificates, instruments and other documents to be delivered under or supplied
in connection with this Agreement or any of the other Security Documents shall be in
the Greek or the English language or shall be accompanied by a certified Greek
translation upon which the Bank shall be entitled to rely.
	 
	 	(b)	 	Certification of documents
	 
	 	 	 	Any copies of documents delivered to the Bank shall be duly certified as true,
complete and accurate copies by appropriate authorities or legal counsel practising
in Greece or otherwise as will be acceptable to the Bank at the sole discretion of
the Bank.
	 
	 	(c)	 	Certification of signature
	 
	 	 	 	Signatures on Board or shareholder resolutions, Secretary’s certificates and any
other documents are, at the discretion of the Bank, to be verified for their
genuineness by appropriate Consul or other competent authority.

	14.8	 	Further assurances
	 
	 	 	The Borrower undertakes that the Security Documents shall both at the date of execution and
delivery thereof and so long as any moneys are owing under any of the Security Documents be
valid and binding obligations of the respective parties thereto and enforceable in
accordance with their respective terms and that it will, at its expense, execute, sign,
perfect and do, and will procure the execution, signing, perfecting and doing by each of the
other Security Parties of, any and every such further assurance, document, act or thing as
in the reasonable opinion of the Bank may be necessary or desirable for perfecting the
security contemplated or constituted by the Security Documents.
	 
	14.9	 	Conflicts
	 
	 	 	In the event of any conflict between this Agreement and any of the other Security Documents
and the provisions of this Agreement shall prevail.
	 
	15.	 	NOTICES AND OTHER MATTERS
	 
	15.1	 	Notices
	 
	 	 	Every notice, request, demand or other communication under the Agreement or, unless
otherwise provided therein, under any of the other Security Documents shall:

	 	(a)	 	be in writing delivered personally or be first-class prepaid letter (airmail if
available), or shall be served through a process server or subject to Clause 10.7 by
fax;
	 
	 	(b)	 	be deemed to have been received, subject as otherwise provided in this
Agreement or the relevant Security Document, in the case of fax, at the time of
dispatch as per transmission report (provided that if the date of despatch is
not

53

 

	 	 	 	a business day in the country of the addressee it shall be deemed to have been
received at the opening of business on the next such business day), and in the case
of a letter when delivered or served personally or five (5) days after it has been
put into the post; and

	 	(c)	 	be sent:

	 	(i)	 	if to be sent to the Borrower and any other Security Party, to:

c/o Newfront Shipping S.A.,

69 Akti Miaouli,

185 37 Piraeus, Greece,

Fax No.: +30210 4283544

Attention: Michail Livanos

	 	(ii)	 	in the case of the Bank at:

EMPORIKI BANK OF GREECE S.A.

Shipping Division,

114 Kolokotroni Street,

GR 185 35 Piraeus, Greece,

Fax No.: +30 210 4226779

Attention: The Manager

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

	15.2	 	Confidentiality

	 	(a)	 	Each of the parties hereto agrees and undertakes to keep confidential any
documentation and any confidential information concerning the business, affairs,
directors or employees of the other which comes into its possession in connection with
this Agreement and not to use any such documentation, information for any purpose other
than for which it was provided.
	 
	 	(b)	 	The Borrower acknowledges and accepts that the Bank may be required by law,
regulation or regulatory requirement or any request of any central bank or any court
order to disclose information and deliver documentation relating to the Borrower and
the transactions and matters in relation to this Agreement and/or the other Security
Documents to governmental or regulatory agencies and authorities.
	 
	 	(c)	 	The Borrower acknowledges and accepts that in case of occurrence of any of the
Events of Default the Bank may disclose information and deliver documentation relating
to the Borrower and the transactions and matters in relation to this Agreement and/or
the other Security Documents to third parties to the extent that this is necessary for
the enforcement or the contemplation of enforcement of the Bank’s rights or for any
other purpose for which in the opinion of the Bank, such disclosure would be useful or
appropriate for the interests of the Bank or otherwise and the Borrower expressly
authorises any such disclosure and delivery.
	 
	 	(d)	 	The Borrower acknowledges and accepts that the Bank may be prohibited from
disclosing information to the Borrower by reason of law or duties of confidentiality
owed or to be owed to other persons.

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	 	(e)	 	The Borrower shall be entitled to disclose information and deliver
documentation relating to this Loan Agreement and the Security Documents to third
parties including the Borrower’s consultants and lawyers to the extent that it is
necessary for the enforcement of the Borrower’s rights or protection of Borrower’s
interests under the Loan Agreement.

	15.13	 	Process of personal data

	 
	 	 	The Borrower hereby expressly gives its consent to the
communication for process in the meaning of law 2472/97 by
the Bank of its personal data contained in this Agreement,
the Security Documents, in the Earnings Account and the
Retention Account for onwards communication thereof to an
inter-banking database record called “Teiresias” kept and
solely used by banks and financial institutions. Each of the
Borrowers is entitled at any relevant time throughout the
Security Period to revoke its consent given hereunder by
written notice addressed to the Bank and the Registrar of
“Teiresias A.E.” at 2, Alamanas street, 15125 Maroussi,
Athens, Greece.
	 
	16.	 	APPLICABLE LAW AND JURISDICTION
	 
	16.1	 	Law
	 
	 	 	This Agreement shall be governed by and construed in accordance with Hellenic Law and in
particular with the provisions of (i) Act of the Monetary Committee under Serial No.
187/1978 (as amended), (ii) the provisions of L.D. dated 17.7/13.8.1923 on “Special
Provisions on Societes Anonymes” and (iii) the special terms set out in the resolutions of
the Bank of Greece or any other competent Authority. Moreover, the Borrower hereby
acknowledges and declares that it is fully familiar with the General Transaction Terms of
the Bank and it is hereby agreed that the said General Transaction Terms shall be deemed an
integral part of this Agreement.
	 
	16.2	 	Submission to Jurisdiction

	 	(a)	 	For the exclusive benefit of the Bank, the Borrower hereby (i) irrevocably
submits to the non exclusive jurisdiction of the Courts of Piraeus in Greece and (ii)
agrees that any summons, writ, judicial or extra-judicial notice, protest, payment
order, order for payment, order for enforcement, announcement of claim or other legal
process issued against it in Greece shall be served upon the Process Agent, who is
hereby authorised to accept such service, which shall be deemed to be good service on
the Borrower.
	 
	 	(b)	 	The submission to the jurisdiction of the Courts of Piraeus shall not (and
shall not be construed so as to) limit the right of the Bank to take proceedings
against the Borrower in the courts of any other jurisdiction nor shall the taking of
proceedings in any one or more jurisdictions preclude the taking of proceedings in any
other jurisdiction, whether concurrently or not.
	 
	 	(c)	 	The parties further agree that subject to sub-Clause 16.2(b) the Courts of
Piraeus shall have exclusive jurisdiction to determine any claim which the Borrower may
have against the Bank arising out of or in connection with this Agreement and the
Borrower hereby waives any objections to proceedings with respect to this Agreement in
such courts on the grounds of venue or inconvenient forum.

	16.3	 	Process Agent
	 
	 	 	Mrs. Elly G. Eleftheriou, an attorney at law, of 9 Kalavryton Street, Athens,
Greece, is hereby appointed by the Borrower as agent to accept service (hereinafter “Process Agent”)
upon whom any judicial process in respect of proceedings in Greece may be 

55

 

	 	 	served and any process notice,
judicial or extra-judicial request, demand for payment, payment order, foreclosure proceedings, notarial announcement
of claim, notice, request, demand or other communication under this Agreement or any of the Security Documents.
In the event that the Process Agent (or any substitute process agent notified to the Bank in accordance with the foregoing)
cannot be found at the address specified above (or, as the case may be, notified to the Bank), which will be conclusively
proved by a deed of a process server to the effect that the Process Agent was not found at such address, any process notice,
judicial or extra-judicial request, demand for payment, payment order, foreclosure proceedings, notarial announcement of claim or
other communication to be sent to any Security Party may be validly notified in accordance with the relevant provisions of the
Hellenic Code on Civil Procedure.
	 
	16.4	 	In this Clause 16 “proceedings” means proceedings of any kind, including an application for a provisional or protective measure.

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

	 	 	 	 	 	 	 	 	 

	SIGNED by

	 	 	)	 	 	 	 	 
	Mr. Michail Livanos

	 	 	)	 	 	 	 	 
	for and on behalf of

	 	 	)	 	 	 	 	 
	GRAND MARKELA INC.

	 	 	)	 	 	/s/ Michail Livanos	 	 
	 

	 	 	 	 	 	 	 	 
	of Liberia, in the presence of:

	 	 	)	 	 	Attorney-in-Fact	 	 

	 	 	 	 	 
	 	 	 
	Witness:  	/s/ Dimitrios P. Sioufas
 	 	 
	Name:  	Dimitrios P. Sioufas 	 	 
	Address:      Alassia Building	 	 
	  	13 Defteras Merarchias Str., Piraeus, Greece	 	 
	Occupation: 	Attorney-at-law	 
	 

	 	 	 	 	 	 	 	 	 

	SIGNED by

	 	 	)	 	 	 	 	 
	Mr. Serafeim Kriempardis and

	 	 	)	 	 	/s/ Serafeim Kriempardis
	 	 
	 

	 	 	 	 	 	 	 	 
	Mrs. Christina Margelou

	 	 	)	 	 	Attorney-in-Fact	 	 
	for and on behalf of

	 	 	)	 	 	 	 	 
	EMPORIKI BANK OF GREECE S.A.

	 	 	)	 	 	 	 	 
	in the presence of:

	 	 	)	 	 	/s/ Christina Margelou	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Attorney-in-Fact	 	 

	 	 	 	 	 
	 	 	 
	Witness:  	/s/ Dimitrios P. Sioufas
 	 	 
	Name:  	Dimitrios P. Sioufas 	 	 
	Address:      Alassia Building	 	 
	  	13 Defteras Merarchias Str., Piraeus, Greece	 	 
	Occupation: 	Attorney-at-law	 
	 

56

 

	 	 	 	 	 

SCHEDULE 1

FORM OF DRAWDOWN NOTICE

(referred to in Clause 2.2)

	To:  	 	EMPORIKI BANK OF GREECE S.A.

144 Kolokotroni Street.

GR 185.35 Piraeus

Greece

(the “Bank”)

[•]November, 2006

Re: US$14,750,000  — Loan Agreement No.      /2006 dated [•] November, 2006 made between
(A) GRAND MARKELA INC. (the “Borrower”) and (B) the Bank (the “Loan Agreement”)

We refer to the Loan Agreement and hereby give you notice that we wish to draw the Commitment in
the amount of Fourteen million seven hundred fifty thousand Dollars ($14,750,000) on [•]
2006. We select a first Interest Period in respect of the Loan of [•] months. The funds
should be credited to ([•] [•] [name and number of account] [•]) with [•]

We confirm that:

	(a)	 	no event or circumstance has occurred and is continuing which constitutes a Default;
	 
	(b)	 	the representations and warranties contained in Clause 6 of the Loan Agreement and the
representations and warranties contained in each of the other Security Documents 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 drawing down of the Commitment 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)	 	to the best of our knowledge and belief there has been no material adverse change in our
financial position or in the consolidated financial position of ourselves and the other
Security Parties 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 when used herein.

	 	 	 	 	 

	SIGNED by

	 	 	)	 
	Mr.

	 	 	)	 
	for and on behalf of

	 	 	)	 
	GRAND MARKELA INC.

	 	 	)	 
	of Liberia, in the presence of:

	 	 	)	 

57

 

SCHEDULE 2

INSURANCE REQUIREMENTS

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

	1.	 	DEFINITIONS
	 
	1.1	 	Words and expressions used in this Schedule shall have the meanings given thereto in the
agreement to which this Schedule is attached and the following expressions shall have the
meanings listed below:
	 
	 	 	“Approved Brokers” means such firm of insurance brokers, appointed by the Owner, as may from
time to time be approved by the Bank in writing for the purposes of this Schedule;
	 
	 	 	“Excess risks” means the proportion (if any) of claims for general average, salvage and
salvage charges and under the ordinary collision clause not recoverable in consequence of
the value at which a vessel is assessed for the purpose of such claims exceeding its insured
value;
	 
	 	 	“Insurance Requirements” means all the terms and conditions in this Schedule or any other
provision concerning Insurances in any other Clause of the agreement to which this Schedule
is attached and all such terms and conditions are an integral part of the agreement to which
they are attached;
	 
	 	 	“Insurances” in respect of a vessel means all policies and contracts of insurance
(including, without limitation, all entries of such vessel in a protection and indemnity,
war risks or other mutual insurance association) which are from time to time in place or
taken out or entered into by or for the benefit of the Owner owning such vessel (whether in
the sole name of its Owner or in the joint names of its Owner and the Bank) in respect of
such vessel and its earnings or otherwise howsoever in connection with such vessel and all
benefits of such policies and/or contracts (including all claims of whatsoever nature and
return of premiums);
	 
	 	 	“Loss Payable Clauses” means the provisions regulating the manner of payment of sums
receivable under the Insurances which are to be incorporated in the relevant insurance
document, such Loss Payable Clauses to be in the forms set out in paragraph 4 of this
Schedule, or such other form as the Bank may from time to time agree in writing;
	 
	 	 	“Owner” means the owner of a vessel which should be insured and be maintained insured
pursuant to these Insurance Requirements in accordance with any agreement to which these
Insurance Requirements are attached;
	 
	 	 	“Protection and Indemnity Risks” means the usual risks covered by an English protection and
indemnity association including the proportion (if any) not recoverable in the case of
collision under the ordinary collision clause; and
	 
	 	 	“War risks” includes the risk of mines and all risks excluded from the standard form of
English marine policy by the free of capture and seizure clause.
	 
	2.	 	INSURANCES TO BE EFFECTED AND MAINTAINED
	 
	2.1	 	The insurance which must be effected and maintained in accordance with the provisions of the
agreement to which these Insurance Requirements are attached should be in the name of the
Owner and as follows:

58

 

	 	(a)	 	Hull and Machinery
	 
	 	 	 	insurance against fire and usual marine risks on an agreed value basis, on a full
cover/all risks basis according to English or American Hull Clauses with a
reasonable deductible and upon such terms as shall from time to time be approved in
writing by the Bank; and
	 
	 	(b)	 	War Risks Insurance
	 
	 	 	 	insurance against War risks according to the London Institute War Clauses, on an
agreed value basis attaching also the so called war protection clauses. In this
case crew war liabilities insurance shall also have to be effected separately; and
	 
	 	(c)	 	Increased Value
	 
	 	 	 	increased Value insurance (Total Loss only, including Excess Liabilities) as per the
applicable English or American Institute Clauses (Disbursement/Increased Value/
Excess Liabilities) up to an amount not exceeding the Insurance Amount specified in
Clause 3.3 below; and
	 
	 	(d)	 	Protection and Indemnity
	 
	 	 	 	insurance against protection and indemnity risks for the full value and tonnage of
the vessel insured (as approved in writing by the Bank) according to the relevant
rules and deductibles provided thereof for all risks including Pollution (and if the
vessel is passenger ship including liability towards third parties which is not
covered by the War Risk Insurance) insured by P+I Clubs, members of the
International Group of Protection and Indemnity Associations. If any risks are
excluded or the deductibles as provided by the rules have been altered, the written
consent of the Bank shall have to be previously required. In case that crew
liabilities (including without limitation loss of life, injury or illness) have been
entirely excluded from the association cover or insured on a deductible excess
basis, (always subject to the prior written consent of the Bank) such liabilities
shall have to be further insured separately with other underwriters acceptable to
the Bank and upon such terms as shall from time to time be approved in writing by
the Bank; and
	 
	 	(e)	 	FD & D Insurance
	 
	 	 	 	(If so required by the Bank, at its absolute discretion, at any time throughout the
Security Period) Freight, Demurrage and Defence insurance as per the terms and
conditions of a mutual club or association acceptable to the Bank; and
	 
	 	(f)	 	Pollution Liability Insurance
	 
	 	 	 	an extra insurance in respect of excess Oil Pollution Liability (including -if the
vessel insured is a tanker- the Civil Liability Convention certificate) including
full cover of pollution risks for the amount up to the maximum commercially
available limit and upon such terms as shall be commercially available and accepted
by the Bank; and
	 
	 	(g)	 	USA Pollution Risk Insurance
	 
	 	 	 	(in case that the vessel is scheduled to operate within or nearby USA jurisdiction)
to cover and keep such vessel covered with an extra insurance in respect of oil
pollution liability for an amount and upon such terms as required

59

 

	 	 	 	by international and national law regulations and shall from time to time be
required by the Bank; and

	 	(h)	 	MII
	 
	 	 	 	MII which shall be effected by the Bank in its name but at the expense of the
Borrower and in an amount equal to 120% of the amount of the Loan including
Mortgagee’s asset protection (pollution) cover or other similar insurance in respect
of any pollution claims against the Vessel under the so called “German wording” for
360 days or at the Bank’s wording and upon such other terms as shall from time to
time be determined by the Bank; and
	 
	 	(i)	 	Other Insurance
	 
	 	 	 	insurance in respect of such other matters of whatsoever nature and howsoever
arising in respect of which the Bank would at any time require at its discretion the
vessel to be insured.

	3.	 	TERMS AND OBLIGATIONS FOR EFFECTING AND MAINTAINING INSURANCES
	 
	3.1	 	The Insurances to be effected in such currency as the Bank may approve and through the
Approved Brokers (other than the mortgagee’s interest insurance which shall be effected
through brokers nominated by the Bank) and with such insurance companies and/or underwriters
as shall from time to time be approved in writing by the Bank, provided however that
the insurances against war risks, protection and indemnity, FD & D cover or other mutual
insurance risks may be effected by the entry of the vessel with such war, protection and
indemnity or other mutual insurance associations as shall from time to time be approved in
writing by the Bank.
	 
	3.2	 	The Insurances to be effected and maintained free of cost and expense to the Bank and in the
sole name of the Owner or, if so required by the Bank, in the joint names of the Owner and the
Bank (but without liability on the part of the Bank for premiums or calls). All insurances to
be in form and substance and under terms satisfactory to the Bank and with insurers acceptable
to the Bank.
	 
	3.3	 	Unless otherwise agreed in writing by the Bank:

	 	(a)	 	The amount in respect of which the Insurances should be effected shall be an
amount (Insurance Amount) which will be (aa) in respect of Hull and Machinery Insurance
the greater of the market value of the vessel insured for the time being and 130% of an
amount (the “Amount of Debt”) equal to (i) the Loan if the agreement to which these
Insurance Requirements are attached is a Loan Agreement or (ii) the Maximum Limit of
the Facility if the agreement to which these Insurance Requirements are attached is an
Overdraft Facility or a Facility for Issue of Guarantees or Letters of Credit; and (bb)
in respect of MII 120% of the Amount of Debt.
	 
	 	(b)	 	In case that the Amount of Debt is secured by more than one vessel the above
percentages should be covered by the aggregate of the Insurances in respect of all such
vessels.
	 
	 	(c)	 	In case that the vessel insured secures by its Insurances Amounts of Debt under
more than one agreement then the above percentages apply to the aggregate of all the
Amounts of Debt under all the agreements.

	3.4	 	Any person which is obliged under the agreement to which these Insurance Requirements are
attached to effect and maintain the Insurances, it will be obliged and

60

 

	 	 	it hereby undertakes, jointly and severally with any other person having the same obligation
to (and will ensure that the Owner, if it is a different person shall):

	 	(a)	 	procure and ensure that the Approved Brokers and/or the Club Managers, as the
case may be, shall send to the Bank a letter of undertaking in respect of the
Insurances in form and substance satisfactory to the Bank and Notice of Cancellation as
per Clause 4(d) below. The Approved Brokers’ Letter of Undertaking shall be compatible
with the form recommended by Lloyd’s Insurance Brokers Committee, or any subsequent
LIBC form. Such brokers to further undertake to give immediate notice of any insurance
being subject to the Condition Survey Warranty (J.H.II5) and/or Structural Conditions
Warranty (J.H.722) and/or the Classification Clause (Hulls) 29/6/89, 30 days prior to
the attachment date of any insurance bearing any of these warranties.
	 
	 	(b)	 	(if any of the Insurances form part of a fleet cover), procure that the
Approved Brokers shall undertake to the Bank that they shall neither set off against
any claims in respect of the vessel insured any premiums due in respect of other
vessels under such fleet cover or any premiums due for other insurances, nor cancel the
insurance for reasons of non-payment of premiums for other vessels under such fleet
cover or of premiums for such other insurances, and shall undertake to issue a separate
policy in respect of the vessel insured if and when so requested by the Bank;
	 
	 	(c)	 	punctually pay all premiums, calls, contributions or other sums payable in
respect of all Insurances and produce all relevant receipts or other evidence of
payment when so required by the Bank;
	 
	 	(d)	 	at least fourteen (14) days before the Insurances expire, notify the Bank of
the names of the brokers and/or the war risks and protection and indemnity risks
associations proposed to be employed by the Owner for the purposes of the renewal of
such Insurances and of the amounts in which such Insurances are proposed to be renewed
and the risks to be covered and, subject to compliance with any requirements of the
Bank under the Insurance Requirements, procure that appropriate instructions for the
renewal of such Insurances on the terms so specified are given to the Approved Brokers
and/or to the approved war risks and protection and indemnity risks associations at
least ten (10) days before the relevant Insurances expire, and that the Approved
Brokers and/or the approved war risks and protection and indemnity risks associations
will at least seven (7) days before such expiry (or within such shorter period as the
Bank may from time to time agree) confirm in writing to the Bank as and when such
renewals have been effected in accordance with the instructions so given;
	 
	 	(e)	 	arrange for the execution and delivery of such guarantees or indemnities as may
from time to time be required by any protection and indemnity or war risks association;
	 
	 	(f)	 	deposit with the Approved Brokers (or procure the deposit of) all slips, cover
notes, policies, certificates of entry or other instruments of insurance from time to
time issued and procure that the interest of the Bank shall be endorsed thereon by
incorporation of the relevant Loss Payable Clause and by means of a notice of
assignment (signed by the Owner) in the form set out in Paragraph 4 of this Schedule or
in such other form as may from time to time be agreed in writing by the Bank, and that
the Bank shall be furnished with pro forma copies thereof and a letter or letters of
undertaking from the Approved Brokers in such form as shall from time to time be
required by the Bank;

61

 

	 	(g)	 	procure that any protection and indemnity and/or war risks associations and/or
Hull and Machinery and/or any other insurance company or underwriters in which the
vessel insured is for the time being entered and/or insured shall endorse the relevant
Loss Payable Clause on the relevant certificate of entry or policy and shall furnish
the Bank with a copy of such certificate of entry or policy and a letter or letters of
undertaking in such form as shall from time to time be required by the Bank;
	 
	 	(h)	 	(if so requested by the Bank, but at the cost of the Owner) furnish the Bank
from time to time with a detailed report signed by an independent firm of marine
insurance brokers appointed by the Bank dealing with the Insurances maintained on the
vessel insured and stating the opinion of such firm as to the adequacy thereof;
	 
	 	(i)	 	do all things necessary and provide all documents, evidence and information to
enable the Bank to collect or recover any moneys which shall at any time become due in
respect of the Insurances;
	 
	 	(j)	 	ensure that the vessel insured shall not be employed otherwise than in
conformity with the terms of the Insurances (including any warranties express or
implied therein) without first obtaining the consent of the insurers to such employment
and complying with such requirements as to extra premium or otherwise as the insurers
may prescribe;
	 
	 	(k)	 	apply all sums receivable under the Insurances which are paid to the Owner in
accordance with the Loss Payable Clauses in repairing all damage and/or in discharging
the liability in respect of which such sums shall have been received; and
	 
	 	(l)	 	(in case that the vessel is scheduled to operate or operates within or nearby
USA jurisdiction) make all the Protection & Indemnity Club US Voyage Quarterly
Declarations for each quarter in time and send copies of same to the Bank.
	 
	 	(m)	 	Fleet Cover is permitted only subject to the prior written approval of the
Bank, to the conditions set out in 3.4(b) above and the Bank’s prior express written
approval of fleet aggregate deductibles.

	4.	 	LOSS PAYABLE CLAUSES AND CANCELLATION CLAUSE
	 
	 	 	The Loss Payable Clauses to be attached to the relevant Insurances should be substantially
in the following form:
	 
	(A)	 	Hull and Machinery (Marine and War Risks)
	 
	 	 	It is noted that by a Deed of General Assignment and a first
priority statutory  . .   . .  . .  . . . . ship
Mortgage and a Deed of covenant supplemental thereto, both dated  . .
.. .  . .  . .  . .  . .  . . .., 2006  granted by  . .  . .  . .  . .  . .  . .  . .  . .  . .  . .  . .  . .  . . , of . .  . .  . .  . .  . .  . . .  (the “Owner”) in favour of EMPORIKI BANK OF GREECE S.A., acting through its office
at 114 Kolokotroni Street, Piraeus, Greece (the “Mortgagee”) all the Owner’s rights, title
and interest in and to all policies and contracts of insurance from time to time taken out
or entered into by or for the benefit of the Owner including all claims of whatsoever nature
and return or premia in respect of the  . . .  . . .  . . .  . . . .. flag m/v “ . . .  . . .  . . .  . . .  . . .  . . . ..” and accordingly:

	 	(a)	 	all claims hereunder in respect of an actual or constructive or compromised or
arranged total loss, and all claims in respect of a major casualty (that is to say any
casualty the claim in respect of which exceeds the Major Casualty

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	 	 	 	Amount inclusive of any deductible shall be paid in full to the Mortgagee or to its
order; and

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

	 	 	Payment of any recovery which  . . .  . . .  . . .  . . .  . . . .. . . .  . . .  . . .  . . .  . . . ., of  . . .  . . .  . . .  . . .  . . .  . . .  . . .  (the “Owner”) is
entitled to make out of the funds of the Association in respect of any
liability, costs or expenses incurred by the Owner, shall be made to
the Owner or to its order, unless and until the Association receives
notice to the contrary from EMPORIKI BANK OF GREECE S.A., acting
through its office at 114 Kolokotroni Street, Piraeus, Greece (the
“Mortgagee”) in which event all recoveries shall thereafter be paid to
the Mortgagee or to its order; provided that no liability whatsoever
shall attach to the Association, its managers or its agents for
failure to comply with the latter obligation until the expiry of two
clear business days from the receipt of such notice.
	 
	4.2	 	Notice of Cancellation
	 
	 	 	The Owner to procure that Notice of Cancellation of Insurances is
given to the Mortgagee along the following terms:

Notice of Cancellation of Insurances will be given to EMPORIKI BANK OF
GREECE S.A., acting through its office at 114 Kolokotroni Street,
Piraeus, Greece (the “Mortgagee”) in any of the following cases:

	 	(a)	 	immediately of any material changes which are proposed to be made in the terms
of the Insurances or if the insurers cease to be insurers for any purposes connected
with the Insurances;
	 
	 	(b)	 	not later than fourteen (14) days prior to the expiry of any of the Insurances
if instructions have not been received for the renewal thereof and, in the event of
instructions being received to renew, of the details thereof;
	 
	 	(c)	 	immediately of any instructions or notices received by insurers with regard to
the cancellation or invalidity of any of the Insurances aforesaid; and
	 
	 	(d)	 	immediately if the insurers give notice of their intention to cancel the
Insurances, provided that the insurers will not exercise any rights of
cancellation by reason of unpaid premiums without giving the Bank fourteen (14) days,
from the receipt of such notice in which to remit the sums due.

	4.3	 	Notice of Assignment
	 
	 	 	The Notice of Assignment shall be in the following form:

Form of Notice of Assignment — First Mortgage

(for attachment by way of endorsement to the Policy)

	 	 	 . . .  . . .  . . .  . . .  . . . . . . . .  . . .  . . .  .
.. .  . . .  . . .  . . .  . . . , of  . . .  . . .  . . .  . . .  . .
..  . . .  (the “Owner”) the owner of the m/v  “. . .  . . .  . . .  . . .  . . .  . . .  ” registered under  . . .  . . .  . . .  . . .  . . .  flag, (the “Vessel”)
HEREBY GIVE NOTICE that by a Deed of General Assignment made the .... day of  . . .  . . .  . . .  . . .  . . . , 2006 and
entered into by us with EMPORIKI BANK OF GREECE S.A., acting through its office at 114
Kolokotroni Street, Piraeus, Greece (the

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	 	 	“Mortgagee”) there has been assigned by us to the Mortgagee, as first Mortgagee and
first assignee of the Vessel all rights, title and interest in and to all policies
and contracts of insurance from time to time taken out or entered into by or for the benefit
of the Owner, all insurances in respect thereof, including the insurances constituted by the
Policy whereon this notice is endorsed and the Owner has authorised the Mortgage to have
access and/or obtain any copies of the Policy(ies), certificate(s) of entry and/or other
information from the insurers.

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

	 	 	 	 	 
	For and on behalf of

The Owner

 	 	 
	By:  	
 	 	 
	 	Attorney-in-fact 	 	 
	 	 	 	 
	 

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