Document:

d876099_ex4-10.htm

    EXHIBIT
4.10

    

    

    

    

    

    

    Date      November
2007

    

    PARAGON
SHIPPING INC.

    as
Borrower

    

    -
and -

    

    THE
BANKS AND FINANCIAL INSTITUTIONS

    listed
in Schedule 1

    as
Lenders

    

    -
and -

    

    BAYERISCHE
HYPO-UND VEREINSBANK AG

    as
Agent, Arranger and as Security Trustee

    

    

    -
and -

    

    BAYERISCHE
HYPO-UND VEREINSBANK AG

    as
Swap Bank

    

    __________________________________

    

    LOAN
AGREEMENT

    __________________________________

    

    relating
to a secured credit facility of

    up
to US$100,000,000 to be secured on certain vessels

    

    

    
      
        
          WATSON
FARLEY & WILLIAMS

          Piraeus

        

         

      

      
         

        
          

        

      

      
         

      

    

    INDEX

    

    

    

    
      	
              Clause

            	 
      	
              Page

            
	 
      	 
      	 
      
	
              1

            	
              INTERPRETATION

            	
              1

            
	
              2

            	
              FACILITY

            	
              17

            
	
              3

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

            	
              17

            
	
              4

            	
              DRAWDOWN

            	
              18

            
	
              5

            	
              INTEREST

            	
              19

            
	
              6

            	
              INTEREST
      PERIODS

            	
              21

            
	
              7

            	
              DEFAULT
      INTEREST

            	
              22

            
	
              8

            	
              REPAYMENT
      AND PREPAYMENT

            	
              23

            
	
              9

            	
              CONDITIONS
      PRECEDENT

            	
              25

            
	
              10

            	
              REPRESENTATIONS
      AND WARRANTIES

            	
              26

            
	
              11

            	
              GENERAL
      UNDERTAKINGS

            	
              27

            
	
              12

            	
              CORPORATE
      UNDERTAKINGS

            	
              31

            
	
              13

            	
              INSURANCE

            	
              33

            
	
              14

            	
              SHIP
      COVENANTS

            	
              38

            
	
              15

            	
              SECURITY
      COVER

            	
              42

            
	
              16

            	
              PAYMENTS
      AND CALCULATIONS

            	
              44

            
	
              17

            	
              APPLICATION
      OF RECEIPTS

            	
              45

            
	
              18

            	
              APPLICATION
      OF EARNINGS

            	
              46

            
	
              19

            	
              EVENTS
      OF DEFAULT

            	
              48

            
	
              20

            	
              FEES
      AND EXPENSES

            	
              52

            
	
              21

            	
              INDEMNITIES

            	
              53

            
	
              22

            	
              NO
      SET-OFF OR TAX DEDUCTION

            	
              55

            
	
              23

            	
              ILLEGALITY,
      ETC

            	
              56

            
	
              24

            	
              INCREASED
      COSTS

            	
              56

            
	
              25

            	
              SET
      OFF

            	
              58

            
	
              26

            	
              TRANSFERS
      AND CHANGES IN LENDING OFFICES

            	
              58

            
	
              27

            	
              VARIATIONS
      AND WAIVERS

            	
              61

            
	
              28

            	
              NOTICES

            	
              62

            
	
              29

            	
              SUPPLEMENTAL

            	
              64

            
	
              30

            	
              LAW
      AND JURISDICTION

            	
              64

            
	
              SCHEDULE
      1  LENDERS AND COMMITMENTS

            	
              66

            
	
              SCHEDULE
      2  DETAILS OF EXISTING SHIPS AND OWNERS

            	
              67

            
	
              SCHEDULE
      3  DRAWDOWN NOTICE

            	
              69

            
	
              SCHEDULE
      4  CONDITION PRECEDENT DOCUMENTS

            	
              70

            
	
              SCHEDULE
      6  FORM OF COMPLIANCE CERTIFICATE

            	
              78

            
	
              SCHEDULE
      7  MANDATORY COST FORMULA

            	
              79

            
	
              SCHEDULE
      8  DESIGNATION NOTICE

            	
              81

            
	
              EXECUTION
      PAGES

            	
              82

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    THIS LOAN AGREEMENT is made
on         November
2007

    

    BETWEEN:

     

    
      	
              (1)

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

            

    

     

    
      	
              (2)

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

            

    

     

    
      	
              (3)

            	
              BAYERISCHE HYPO-UND VEREINSBANK
      AG acting through its office at 62, Notara Street, Piraeus, Greece,
      as Agent;

            

    

     

    
      	
              (4)

            	
              BAYERISCHE HYPO-UND VEREINSBANK
      AG acting through its office at 62, Notara Street, Piraeus, Greece,
      as Arranger;

            

    

     

    
      	
              (5)

            	
              BAYERISCHE HYPO-UND VEREINSBANK
      AG acting through its office at 62, Notara Street, Piraeus, Greece,
      as Security Trustee;

            

    

     

    
      	
              (6)

            	
              BAYERISCHE HYPO-UND VEREINSBANK
      AG acting through its office at Arabellastrasse 12, 81925 Munich,
      Germany, as Swap
      Bank.

            

    

     

    WHEREAS

     

    
      	
              (A)

            	
              The
      Lenders have agreed to make available to the Borrower a secured credit
      facility in an amount of up to US$100,000,000 to finance up to 50% of the
      lesser of (a) the aggregate Market Value of the Ships and (b) the
      aggregate purchase price of the Ships.  The Borrower will
      on-lend the loan to the Owners to assist them in refinancing the
      indebtedness secured on the Existing Ships and in part-financing the
      purchase price of Target
Ships.

            

    

     

    
      	
              (B)

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

            

    

     

    
      	
              (C)

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

            

    

     

    IT IS AGREED as
follows:

     

    
      	
              1

            	
              INTERPRETATION

            

    

     

    
      	
              1.1

            	
              Definitions.  Subject
      to Clause 1.5, in this Agreement:

            

    

     

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

     

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

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

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

    

    
      	
               
      

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

            

    

     

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

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

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

     

    “Arranger” means Bayerische
Hypo-und Vereinsbank AG acting through its office at 62, Notara Street, Piraeus,
Greece;

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              (a)

            	
              the
      earlier of (i) the date falling on the first anniversary of this Agreement
      and (ii) 30 November 2008 or such later date as the Agent may, with the
      authorisation of all the Lenders, agree with the Borrower;
    or

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

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

     

    
      	
               
      

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

            

    

     

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

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

     

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

     

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

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

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

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

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

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

    “Dividend Declaration Date”
means, in respect of each quarterly period during each Financial Year, a date
(being a Business Day) falling no later than 45 days after the end of the
relevant preceding financial quarter but in any event not later than 10 days
prior to any intended declaration by the Borrower to its shareholders of any
dividend;

     

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

     

    
      	
               
      

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

            

    

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              (a)

            	
              all
      freight, hire and passage moneys, compensation payable to the relevant
      Owner or the Security Trustee in the event of requisition of that Ship for
      hire, remuneration for salvage and towage services, demurrage and
      detention moneys and damages for breach (or payments for variation or
      termination) of any charterparty or other contract for the employment of
      the Ship;

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

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

     

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

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Net
      Interest Expenses; and

            

    

     

    
      	
               
      

            	
              (iii)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

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

     

    
      	
               
      

            	
              “Environmental Claim”
      means:

            

    

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              (a)

            	
              any
      release of Environmentally Sensitive Material from that Ship;
      or

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

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

     

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

     

    
      	
               
      

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

            

    

     

    “Final Maturity Date” means 31
December 2010;

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

            	
              “Finance Documents”
      means:

            

    

     

    
      	
               
      

            	
              (a)

            	
              this
      Agreement;

            

    

     

    
      	
               
      

            	
              (b)

            	
              the
      Master Agreement;

            

    

     

    
      	
               
      

            	
              (c)

            	
              the
      Agency and Trust Deed;

            

    

     

    
      	
               
      

            	
              (d)

            	
              the
      Fee Letter;

            

    

     

    
      	
               
      

            	
              (e)

            	
              the
      Guarantees;

            

    

     

    
      	
               
      

            	
              (f)

            	
              the
      Master Agreement Assignment;

            

    

     

    
      	
               
      

            	
              (g)

            	
              the
      Mortgages;

            

    

     

    
      	
               
      

            	
              (h)

            	
              the
      General Assignments;

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      Deeds of Covenant;

            

    

     

    
      	
               
      

            	
              (j)

            	
              the
      Existing Ship Earnings Accounts
Pledges;

            

    

     

    
      	
               
      

            	
              (k)

            	
              the
      Target Ship Earnings Accounts
Pledges;

            

    

     

    
      	
               
      

            	
              (l)

            	
              the
      Retention Account Pledge;

            

    

     

    
      	
               
      

            	
              (m)

            	
              any
      Charterparty Assignment;

            

    

     

    
      	
               
      

            	
              (n)

            	
              the
      Manager’s Undertakings; and

            

    

     

    
      	
               
      

            	
              (o)

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

    
      	
               
      

            	
              (d)

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

            

    

     

    
      	
               
      

            	
              (e)

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

            

    

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

            	
              (f)

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

            

    

     

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

     

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

     

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

     

    
      	
               
      

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

            

    

     

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

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              “IACS” means the
      International Association of Classification
  Societies;

            

    

     

    
      	
               
      

            	
              “Insurances”  means,
      in relation to each Ship:

            

    

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

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

     

    “ISM Code” means:

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

    
      	
               
      

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

            

    

     

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

     

    
      	
               
      

            	
              “ISPS Code Documentation”
      includes:

            

    

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              “Lender” means, subject
      to Clause 26.6:

            

    

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

            	
              the
      holder for the time being of a Transfer
  Certificate;

            

    

     

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

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              “LIBOR” means, for an
      Interest Period:

            

    

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

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

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

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

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    

    
       

      “Majority Lenders”
means:

       

    

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

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

     

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

     

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

     

    “Margin” means:

     

    
      	
               
      

            	
              (a)

            	
              at
      any time when the Leverage Ratio is above 55 per cent. per annum, 1.40 per
      cent. per annum; and

            

    

     

    
      	
               
      

            	
              (b)

            	
              at
      all other times, 1.20 per cent. per
annum;

            

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

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

            

    

     

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

     

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

     

    “Owner” means:

     

    
      	
               
      

            	
              (a)

            	
              in
      relation to each Existing Ship, Frontline Marine Company, Trade Force
      Shipping S.A. and Opera Navigation Co., each a corporation incorporated in
      the Republic of the Marshall Islands having its registered office at Trust
      Company Complex, Ajeltake Road, Ajeltake Island, Majuro, The Marshall
      Islands MH 96960; and

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

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

    

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

     

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

     

    
      	
               
      

            	
              “Permitted Security
      Interests” means:

            

    

     

    
      	
               
      

            	
              (a)

            	
              Security
      Interests created by the Finance
Documents;

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

            	
              liens
      for salvage;

            

    

     

    
      	
               
      

            	
              (d)

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

            

    

     

    
      	
               
      

            	
              (e)

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

            

    

     

    
      	
               
      

            	
              (f)

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

            

    

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

            	
              (g)

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              (a)

            	
              England
      and Wales;

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

    
      	
               
      

            	
              (d)

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

            

    

     

    
      	
               
      

            	
              (e)

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

            

    

     

    
      	
               
      

            	
              (f)

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

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

     

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

     

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

     

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

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

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

            

    

     

    “Security Interest”
means:

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

    
      	
               
      

            	
              (d)

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

            

    

     

    
      	
               
      

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

            

    

     

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

    

    
      	
               
      

            	
              “Swap Bank” means
      Bayerische Hypo-und Vereinsbank AG a company incorporated under the laws
      of Germany having its registered office at Am Tucherpark 16, D-80538,
      Munich, Germany and acting through its office at Arabellastrasse 12, 81925
      Munich, Germany;

            

    

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    

     

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

     

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

     

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

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

            	
              on
      the date of delivery of such Ship to its Owner, it is no more than 10
      years old;

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

    
      	
               
      

            	
              (d)

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

            

    

     

    
      	
               
      

            	
              (e)

            	
              it
      is to be registered on an Approved Flag;
and

            

    

     

    
      	
               
      

            	
              (f)

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

            

    

     

    and
in the plural, means all of them;

    

    
      	
               
      

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

            

    

     

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

     

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

     

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

     

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

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

    
      	
               
      

            	
              (d)

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

            

    

     

    
      	
               
      

            	
              “Total Loss Date”
      means:

            

    

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
              1.2

            	
              Construction of certain
      terms.  In this
Agreement:

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

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

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              “excess risks” means, in
      relation to a Ship, the proportion of claims for general average, salvage
      and salvage charges not recoverable under the hull and machinery policies
      in

            

    

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    respect
of the Ship in consequence of her insured value being less than the value at
which that Ship is assessed for the purpose of such claims;

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              “protection and indemnity
      risks” means the usual risks covered by a protection and indemnity
      association managed in London, including pollution risks and the
      proportion (if any) of any sums payable to any other person or persons in
      case of collision which are not recoverable under the hull and machinery
      policies by reason of the incorporation therein of clause 1 of the
      Institute Time Clauses (Hulls)(1/10/83) or clause 8 of the Institute Time
      Clauses (Hulls) (1/11/1995) or the Institute Amended Running Down Clause
      (1/10/71) or any equivalent
provision;

            

    

     

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

     

    
      	
               
      

            	
              “subsidiary” has the
      meaning given in Clause 1.4;

            

    

     

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

     

    
      	
               
      

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

            

    

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

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

            

    

     

    
      	
              1.3

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

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

     

    
      	
              1.4

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              (d)

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

            

    

     

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

     

    
      	
              1.5

            	
              General
      Interpretation.

            

    

     

    
      	
              (a)

            	
              In
      this Agreement:

            

    

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

    
      	
               
      

            	
              (iii)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    

     

    
      	
              (d)

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

            

    

     

    
      	
              2

            	
              FACILITY

            

    

     

    
      	
              2.1

            	
              Amount and purpose of
      facility.  Subject to the other provisions of this
      Agreement, the Lenders shall make available to the Borrower a secured
      credit facility in an amount up to $100,000,000 to be used in financing up
      to 50 per cent. of the lesser of (a) the aggregate Market Value of the
      Ships and (b) the aggregate purchase price of the
  Ships.

            

    

     

    
      	
              2.2

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

            

    

     

    
      	
              2.3

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

            

    

     

    
      	
              3

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

            

    

     

    
      	
              3.1

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

            

    

     

    
      	
              3.2

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              3.3

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

            

    

     

    
      	
              (a)

            	
              the
      obligations of the other Lenders being increased;
  nor

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
              3.4

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              3.5

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              3.6

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

            

    

     

    
      	
              4

            	
              DRAWDOWN

            

    

     

    
      	
              4.1

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

            

    

     

    
      	
              4.2

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

            	
              the
      Existing Ships Advance shall not exceed 50 per cent. of the aggregate
      Market Value of the Existing Ships (as determined by the valuations
      referred to in paragraph 5 of Part B of Schedule
  4);

            

    

     

    
      	
              (d)

            	
              each
      Advance (other than the Existing Ships Advance) shall not exceed the
      lesser of (i) 50 per cent. of the lesser of (aa) the Market Value of the
      Ship which is the subject of the Advance (as determined by the valuations
      referred to in paragraph 6 of Part C of Schedule 4) and (bb) the purchase
      price of the relevant Ship (as determined by the MOA for that Ship) and
      (ii) an amount, which after the Advance has been made available to the
      Borrower, results in the Security Cover Percentage not being greater than
      167 per cent. and such Advance shall be applied in financing part of the
      purchase price of the relevant Ship;
and

            

    

     

    
      	
              (e)

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

            

    

     

    
      	
              4.3

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

            

    

     

    
      	
              (a)

            	
              the
      amount of the Advance and the Drawdown
Date;

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    

     

    
      	
              4.4

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

            

    

     

    
      	
              4.5

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

            

    

     

    
      	
              4.6

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              4.7

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

            

    

     

    
      	
              5

            	
              INTEREST

            

    

     

    
      	
              5.1

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

            

    

     

    
      	
              5.2

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

            

    

     

    
      	
              5.3

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

            

    

     

    
      	
              5.4

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

            

    

     

    
      	
              (a)

            	
              each
      rate of interest; and

            

    

     

    
      	
              (b)

            	
              the
      duration of each Interest Period;

            

    

     

      as soon as reasonably
practicable after each is determined.

     

    
      	
              5.5

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

            	
              at
      least one Business Day before the start of an Interest Period, Lenders
      having Contributions together amounting to more than 50 per cent. of the
      Loan (or, if an Advance has not been made, Commitments amounting to more
      than 50 per cent. of the

            

    

     

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    Total
Commitments) notify the Agent that LIBOR fixed by the Agent would not accurately
reflect the cost to those Lenders of funding their respective Contributions (or
any part of them) during the Interest Period in the London Interbank Dollar
Market at or about 11.00 a.m. (London time) on the second Business Day before
the commencement of the Interest Period; or

     

    
      	
              (c)

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

            

    

     

    
      	
              5.6

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

            

    

     

    
      	
              5.7

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
              5.8

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

            

    

     

    
      	
              5.9

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

            

    

     

    
      	
              5.10

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

            

    

     

    
      	
              5.11

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

            

    

     

    
      	
              5.12

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

            

    

     

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              5.13

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

            

    

     

    
      	
              5.14

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

            

    

     

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

    

    
      	
              6

            	
              INTEREST
      PERIODS

            

    

     

    
      	
              6.1

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

            

    

     

    
      	
              6.2

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              (d)

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

            

    

     

    
      	
              7

            	
              DEFAULT
      INTEREST

            

    

     

    
      	
              7.1

            	
              Payment of default interest on
      overdue amounts.  The Borrower shall pay interest in
      accordance with the following provisions of this Clause 7 on any amount
      payable by the

            

    

     

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    Borrower
under any Finance Document which the Agent, the Security Trustee or the other
designated payee does not receive on or before the relevant date, that
is:

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              7.2

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              7.3

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
               
      

            	
              (i)

            	
              LIBOR;
      or

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

    
      	
              7.4

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

            

    

     

    
      	
              7.5

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

            

    

     

    
      	
              7.6

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

            

    

     

    
      	
              7.7

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

            

    

     

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    

     

    
      	
              8

            	
              REPAYMENT
      AND PREPAYMENT

            

    

     

    
      	
              8.1

            	
              Amount of repayment
      instalments.  If, on a Dividend Declaration Date, the
      Security Cover Percentage is less than 154 per cent., then the Borrower
      shall repay the Loan in an amount which, once repaid, shall eliminate the
      shortfall.

            

    

     

    
      	
              8.2

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

            

    

     

    
      	
              8.3

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

            

    

     

    
      	
              8.4

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

            

    

     

    
      	
              8.5

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              8.6

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

            

    

     

    
      	
              8.7

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

            

    

     

    
      	
              8.8

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

            

    

     

    
      	
              8.9

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              8.10

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

            

    

     

    
      	
              8.11

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    In
this Clause 8.11, “Relevant
Amount” means the higher of (i) the Advance which was used to finance the
relevant Ship (or, in the case of an Existing Ship, that part of the Existing
Ships Advance which is attributable to that Existing Ship) and (ii) an amount
which after giving credit for the amount of the prepayment made pursuant to this
Clause 8.11, results in the Security Cover Percentage being equal to the higher
of (aa) the Security Cover Percentage maintained immediately prior to the
prepayment made pursuant to this Clause 8.11 and (bb) the Security Cover
Percentage required to be maintained at that time pursuant to Clause
15.1.

     

    
      	
              8.12

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

            

    

     

    
      	
              8.13

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

            

    

     

    
      	
              8.14

            	
              Reborrowing.  Amounts
      prepaid in respect of the Loan may, with the prior consent of the Agent
      (to be given upon the instructions of all the Lenders and subject to such
      terms and conditions as may be specified by the Lenders), be
      reborrowed.

            

    

     

    
      	
              8.15

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

            

    

     

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

    

     

    
      	
              8.16

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

            

    

     

    
      	
              9

            	
              CONDITIONS
      PRECEDENT

            

    

     

    
      	
              9.1

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

            	
              that,
      on or before the Drawdown Date in respect of each Acquisition Advance, the
      Agent receives the documents described in Part C of Schedule 4 in form and
      substance satisfactory to the Agent and its
  lawyers;

            

    

     

    
      	
              (d)

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

            

    

     

    
      	
              (e)

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

            

    

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

    
      	
               
      

            	
              (iii)

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

            

    

     

    
      	
              (f)

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

            

    

     

    
      	
              (g)

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

            

    

     

    
      	
              9.2

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

            

    

     

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

    

     

    
      	
              10

            	
              REPRESENTATIONS
      AND WARRANTIES

            

    

     

    
      	
              10.1

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

            

    

     

    
      	
              10.2

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

            

    

     

    
      	
              10.3

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

            

    

     

    
      	
              10.4

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              10.5

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

            

    

     

    
      	
              10.6

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

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

     

    
      	
              10.7

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              10.8

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

            

    

     

    
      	
              (a)

            	
              any
      law or regulation; or

            

    

     

    
      	
              (b)

            	
              the
      constitutional documents of the Borrower;
or

            

    

     

    
      	
              (c)

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

            

    

     

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

    

     

    
      	
              10.9

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

            

    

     

    
      	
              10.10

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

            

    

     

    
      	
              10.11

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

            

    

     

    
      	
              10.12

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

            

    

     

    
      	
              10.13

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

            

    

     

    
      	
              10.14

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

            

    

     

    
      	
              10.15

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

            

    

     

    
      	
              10.16

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              10.17

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

            

    

     

    
      	
              11

            	
              GENERAL
      UNDERTAKINGS

            

    

     

    
      	
              11.1

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

            

    

     

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

    

     

    
      	
              11.2

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              11.3

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              11.4

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              11.5

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

            

    

     

    
      	
              11.6

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

            

    

     

    
      	
              (a)

            	
              as
      soon as possible, but in no event later than 90 days after the end of each
      Financial Year (commencing with the Financial Year ended 31 December
      2006), the audited consolidated Financial Statements of the Group for that
      Financial Year;

            

    

     

    
      	
              (b)

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

            

    

     

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

    

     

    
      	
              (c)

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

            

    

     

    
      	
              (d)

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

            

    

     

    
      	
              11.7

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              (d)

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

            

    

     

    
      	
              11.8

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

            

    

     

    
      	
              11.9

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

            	
              for
      the validity or enforceability of any Finance
  Document;

            

    

     

    
      	
              (c)

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

            

    

     

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

     

    
      	
              11.10

            	
              Maintenance of Security
      Interests.  The Borrower
will:

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      
         

      

      
        30

        
          

        

      

      
         

      

    

    

     

    
      	
              11.11

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

            

    

     

    
      	
              11.12

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

            

    

     

    
      	
              11.13

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
              11.14

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

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

     

    
      	
              11.15

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

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

     

    
      	
              11.16

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

            

    

     

    
      
         

      

      
        31

        
          

        

      

      
         

      

    

    

     

    
      	
              11.17

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

            

    

     

    
      	
              11.18

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

            

    

     

    
      	
              11.19

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              11.20

            	
              Hedging of interest rate
      risks.  The Borrower shall by no later than 30 days from
      each Drawdown Date enter into such Designated Transactions with the Swap
      Bank (or swap transactions with another bank or financial institution)
      whereby for the period on and from the relevant Drawdown Date up to and
      including the Final Maturity Date, it will hedge all or the major part of
      the interest risk under this Agreement in respect of that Advance (but in
      any event not less than 50 per cent. of the interest rate risk at any time
      during the aforesaid period).  The Borrower shall grant the Swap
      Bank a right or first refusal to quote for all such interest rate swaps
      (by means of Designated Transactions).  If the Borrower hedges
      its interest risk with a bank or financial institution other than the Swap
      Bank it shall deliver to the Agent within 30 days of the relevant Drawdown
      Date evidence satisfactory to the Agent of its compliance with the terms
      of this Clause 11.20.

            

    

     

    
      	
              12

            	
              CORPORATE
      UNDERTAKINGS

            

    

     

    
      	
              12.1

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

            

    

     

    
      	
              12.2

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

            

    

     

    
      	
              12.3

            	
              Negative
      undertakings.  The Borrower will
  not:

            

    

     

    
      	
              (a)

            	
              change
      the nature of its business; or

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              (d)

            	
              provide
      any form of credit or financial assistance
to:

            

    

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

    
      
         

      

      
        32

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

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

            

    

     

    
      	
              (e)

            	
              open
      or maintain any account with any bank or financial institution except
      accounts with the Agent for the purpose of the Finance
      Documents;

            

    

     

    
      	
              (f)

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

            

    

     

    
      	
              (g)

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

            

    

     

    
      	
              (h)

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

            

    

     

    
      	
              12.4

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              (d)

            	
              the
      Leverage Ratio shall not exceed
0.7:1.

            

    

     

    
      	
              12.5

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

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

     

    
      	
              12.6

            	
              Change in accounting
      expressions and policies.  If, by reason of change in
      format or GAAP or other relevant accounting policies, the expressions
      appearing in any accounts and financial statements referred to in Clause
      11.6 alter from those in the accounts and
  financial

            

    

     

    
      
         

      

      
        33

        
          

        

      

      
         

      

    

    statements
for the Borrower for the year ended 31 December 2006, the relevant definitions
contained in Clause 1.1 and the provisions of Clause 12.4 shall be deemed
modified in such manner as the Agent, acting with the authorisation of the
Majority Lenders, shall require to take account of such different expressions
but otherwise to maintain in all respects the substance of those
provisions.

     

    
      	
              12.7

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              12.8

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

            

    

     

    
      	
              12.9

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              (d)

            	
              each
      Dividend Declaration is accompanied by details of the Market Value of each
      Ship determined in accordance with Clause 15.4 and evidence that the
      Security Cover Percentage as at the Dividend Declaration Date is no less
      than 154 per cent.; and

            

    

     

    
      	
              (e)

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

            

    

     

    
      	
              13

            	
              INSURANCE

            

    

     

    
      	
              13.1

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

            

    

     

    
      
         

      

      
        34

        
          

        

      

      
         

      

    

    

     

    
      	
              13.2

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

            	
              war
      risks (including protection and indemnity war
  risks);

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              (d)

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

            

    

     

    
      	
              (e)

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

            

    

     

    
      	
              13.3

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

            

    

     

    
      	
              (a)

            	
              in
      Dollars;

            

    

     

    
      	
              (b)

            	
              in
      the case of fire and usual marine risks and war risks, in an amount on an
      agreed value basis at least the greater of (i) an amount, which when
      aggregated with the insured value of the other Ships at the relevant time
      subject to a Mortgage, is equal to 130 per cent. of the Loan and (ii) the
      Market Value of the Ship owned by it;
and

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              (d)

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

            

    

     

    
      	
              (e)

            	
              on
      approved terms; and

            

    

     

    
      	
              (f)

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

            

    

     

    
      	
              13.4

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

            	
              provide
      that the insurers shall waive, to the fullest extent permitted by English
      law, their entitlement (if any) (whether by statute, common law, equity,
      or otherwise) to be subrogated to the rights and remedies of the Security
      Trustee in respect of any rights or

            

    

     

    
      
         

      

      
        35

        
          

        

      

      
         

      

    

    interests
(secured or not) held by or available to the Security Trustee in respect of the
Secured Liabilities, until the Secured Liabilities shall have been fully repaid
and discharged, except that the insurers shall not be restricted by the terms of
this paragraph (d) from making personal claims against persons (other than the
relevant Owner or any Creditor Party) in circumstances where the insurers have
fully discharged their liabilities and obligations under the relevant obligatory
insurances;

     

    
      	
              (d)

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

            

    

     

    
      	
              (e)

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

            

    

     

    
      	
              (f)

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

            

    

     

    
      	
              13.5

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              13.6

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              (d)

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

            

    

     

    
      
         

      

      
        36

        
          

        

      

      
         

      

    

    to
renew, they will promptly notify the Security Trustee of the terms of the
instructions; and

     

    
      	
              (e)

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

            

    

     

    If
any of the obligatory insurances referred to in Clause 13.6 form part of a fleet
cover, the Borrower will procure that any letter of undertaking referred to in
this Clause is amended to provide that the relevant brokers shall undertake to
the Security Trustee that they shall neither set-off against any claims in
respect of a Ship any premiums due in respect of other vessels under such fleet
cover of any premiums due for other insurances, nor cancel the insurance for
reason of non-payment of premiums for other vessels under such fleet cover or of
premiums for such other insurances.

     

    
      	
              13.7

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              (d)

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

            

    

     

    
      	
              13.8

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

            

    

     

    
      	
              13.9

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

            

    

     

    
      	
              13.10

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

            

    

     

    
      	
              13.11

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

            

    

     

    
      	
              13.12

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

            

    

     

    
      
         

      

      
        37

        
          

        

      

      
         

      

    

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              (d)

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

            

    

     

    
      	
              13.13

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

            

    

     

    
      	
              13.14

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

            

    

     

    
      	
              13.15

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

            

    

     

    
      	
              (a)

            	
              the
      approved brokers; and

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

    
      	
              13.16

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

            

    

     

    
      
         

      

      
        38

        
          

        

      

      
         

      

    

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
              13.17

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
              13.18

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

            

    

     

    
      	
              13.19

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

            

    

     

    
      	
              13.20

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

            

    

     

    
      	
              14

            	
              SHIP
      COVENANTS

            

    

     

    
      	
              14.1

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

            

    

     

    
      	
              14.2

            	
              Ship's name and
      registration.  The Borrower shall procure that each Owner
      shall keep the Ship owned by it registered in its ownership under an
      Approved Flag; shall not do or

            

    

     

    
      
         

      

      
        39

        
          

        

      

      
         

      

    

    allow
to be done anything as a result of which such registration might be cancelled or
imperilled; and shall not change the name or port of registry of any
Ship.

     

    
      	
              14.3

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

            

    

     

    
      	
              (a)

            	
              consistent
      with first-class ship ownership and management
  practice;

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              14.4

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

    
      	
              (d)

            	
              following
      receipt of a written request from the Security
  Trustee:

            

    

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

    
      	
              14.5

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

            

    

     

    
      	
              14.6

            	
              Removal of
      parts.  The Borrower shall procure that no Owner shall
      remove any material part of the Ship owned by it, or any item of equipment
      installed on, the Ship unless the

            

    

     

    
      
         

      

      
        40

        
          

        

      

      
         

      

    

    part
or item so removed is forthwith replaced by a suitable part or item which is in
the same condition as or better condition than the part or item removed, is free
from any Security Interest or any right in favour of any person other than the
Security Trustee and becomes on installation on the Ship the property of the
Owner and subject to the security constituted by the Mortgage and if applicable,
the Deed of Covenant, relative to the Ship Provided that the Owner may
install equipment owned by a third party if the equipment can be removed without
any risk of damage to the Ship.

     

    
      	
              14.7

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

            

    

     

    
      	
              14.8

            	
              Inspection.  The
      Borrower shall procure that:

            

    

     

    
      	
              (a)

            	
              each
      Owner shall permit the Security Trustee (by surveyors or other persons
      appointed by it for that purpose) to board the Ship owned by it at all
      reasonable times to inspect her condition or to satisfy themselves about
      proposed or executed repairs and shall afford all proper facilities for
      such inspections Provided
      that so long as no Event of Default has occurred and is continuing
      at the relevant time and a Ship is found to be in a satisfactory condition
      (in the opinion of the Security Trustee) the Borrower shall be obliged to
      pay the fees and expenses of one inspection of that Ship in any calendar
      year (excluding any inspections conducted pursuant to paragraph (b) of
      this Clause 14.8 which shall be paid for by the Borrower);
    and

            

    

     

    
      	
              (b)

            	
              if
      any survey report for a Target Ship (as referred to at paragraph 5 of
      Schedule 4, Part C) indicates that the Ship is not in a satisfactory
      condition (in the sole discretion of the Security Trustee), the necessary
      improvements shall be made to the Ship (to ensure the Ship is in a
      condition satisfactory to the Security Trustee) by no later than the date
      falling 180 days after the date of the survey report and the Owner of the
      Ship shall permit a surveyor appointed by the Security Trustee to board
      the Ship and inspect her condition.

            

    

     

    
      	
              14.9

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
              14.10

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      
         

      

      
        41

        
          

        

      

      
         

      

    

    

     

    
      	
              (c)

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

            

    

     

    
      	
              14.11

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              (d)

            	
              any
      towages and salvages;

            

    

     

    
      	
              (e)

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
              14.12

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              (d)

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

            

    

     

    
      	
              (e)

            	
              any
      intended dry docking of the Ship;

            

    

     

    
      	
              (f)

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

            

    

     

    
      	
              (g)

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

            

    

     

    
      	
              (h)

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

            

    

     

    
      	
               
      

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

            

    

     

    
      
         

      

      
        42

        
          

        

      

      
         

      

    

    

     

    
      	
              14.13

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              (d)

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

            

    

     

    
      	
              (e)

            	
              de-activate
      or lay up the Ship; or

            

    

     

    
      	
              (f)

            	
              put
      the Ship into the possession of any person for the purpose of work being
      done upon her in an amount exceeding or likely to exceed $500,000 (or the
      equivalent in any other currency) unless that person has first given to
      the Security Trustee and in terms satisfactory to it a written undertaking
      not to exercise any lien on the Ship or her Earnings for the cost of such
      work or otherwise.

            

    

     

    
      	
              14.14

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

            

    

     

    
      	
              14.15

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              14.16

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

            

    

     

    
      	
              15

            	
              SECURITY
      COVER

            

    

     

    
      	
              15.1

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      
         

      

      
        43

        
          

        

      

      
         

      

    

    

     

    
      	
              (b)

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

            

    

     

    
      	
               
      

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

            

    

     

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

     

    In
this Clause 15.1, “Relevant
Percentage” means (i) on any Dividend Declaration Date, 154 per cent. and
(ii) at any other time, 140 per cent.

     

    
      	
              15.2

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

            

    

     

    
      	
              15.3

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

            

    

     

    
      	
              15.4

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

            

    

     

    
      	
              (a)

            	
              as
      at a date not more than 30 days
previously;

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              (d)

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

            

    

     

    
      	
              (e)

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

            

    

     

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

     

    
      
         

      

      
        44

        
          

        

      

      
         

      

    

    

     

    
      	
              15.5

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

            

    

     

    
      	
              15.6

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

            

    

     

    
      	
              15.7

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

            

    

     

    
      	
              15.8

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

            

    

     

    
      	
              16

            	
              PAYMENTS
      AND CALCULATIONS

            

    

     

    
      	
              16.1

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

            

    

     

    
      	
              (a)

            	
              by
      the Lenders to the Agent; or

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

    
      	
               
      

            	
              (iii)

            	
              to
      the account of the Agent at [l] (Account No.
      [l] SWIFT
      Code: [l]
      under reference “Paragon Shipping Inc. - US$100 million facility”), or to
      such other account with such other bank as the Agent may from time to time
      notify to the Borrower and the other Creditor Parties;
  and

            

    

     

    
      	
               
      

            	
              (iv)

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

            

    

     

    
      	
              16.2

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      
         

      

      
        45

        
          

        

      

      
         

      

    

    

     

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

    

    
      	
              16.3

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

            

    

     

    
      	
              16.4

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              16.5

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

            

    

     

    
      	
              16.6

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

            

    

     

    
      	
              16.7

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

            

    

     

    
      	
              (a)

            	
              refund
      the sum in full to the Agent; and

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              16.8

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

            

    

     

    
      	
              16.9

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

            

    

     

    
      	
              16.10

            	
              Agent's memorandum
      account.  The Agent shall maintain a memorandum account
      showing the amounts advanced by the Lenders and all other sums owing to
      the Agent, the

            

    

     

    
      
         

      

      
        46

        
          

        

      

      
         

      

    

    Security
Trustee and each Lender from the Borrower and each Security Party under the
Finance Documents and all payments in respect of those amounts made by the
Borrower and any Security Party.

     

    
      	
              16.11

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

            

    

     

    
      	
              17

            	
              APPLICATION
      OF RECEIPTS

            

    

     

    
      	
              17.1

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

    
      	
               
      

            	
              (iii)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              17.2

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

            

    

     

    
      	
              17.3

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

            

    

     

    
      
         

      

      
        47

        
          

        

      

      
         

      

    

    or
recovered on or after the third Business Day before the date on which the notice
is served.

     

    
      	
              17.4

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

            

    

     

    
      	
              18

            	
              APPLICATION
      OF EARNINGS

            

    

     

    
      	
              18.1

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

            

    

     

    
      	
              18.2

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

            	
              in
      each calendar month of the Security Period commencing on the date falling
      1 month after the first Drawdown Date and on the same day in each
      subsequent month, there is transferred to the Retention Account out of the
      aggregate Earnings received in the Earnings Accounts during the preceding
      calendar month the relevant fraction of the amount of interest on the Loan
      which is payable on the next due date for payment of interest for the Loan
      under this Agreement.

            

    

     

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

     

    
      	
              18.3

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

            

    

     

    
      	
              18.4

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

            	
              the
      amount of interest payable on that interest payment
  date

            

    

     

    
      	
               
      

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

            

    

     

    
      	
              18.5

            	
              Interest accrued on Retention
      Account.  Any credit balance on the Retention Account
      shall bear interest at the rate from time to time offered by the Agent to
      its customers for

            

    

     

    
      
         

      

      
        48

        
          

        

      

      
         

      

    

    Dollar
deposits of similar amounts and for periods similar to those for which such
balances appear to the Agent likely to remain on the Retention
Account.

     

    
      	
              18.6

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

            

    

     

    
      	
              18.7

            	
              Location of
      accounts.  The Borrower shall
  promptly:

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              18.8

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

            

    

     

    
      	
              18.9

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              19

            	
              EVENTS
      OF DEFAULT

            

    

     

    
      	
              19.1

            	
              Events of
      Default.  An Event of Default occurs
  if:

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              (d)

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

            

    

     

    
      	
              (e)

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

            

    

     

    
      
         

      

      
        49

        
          

        

      

      
         

      

    

    

     

    
      	
              (f)

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

            

    

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

    
      	
               
      

            	
              (iii)

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

            

    

     

    
      	
               
      

            	
              (iv)

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

            

    

     

    
      	
               
      

            	
              (v)

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

            

    

     

    
      	
              (g)

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

            

    

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

    
      	
               
      

            	
              (iii)

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

            

    

     

    
      	
               
      

            	
              (iv)

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

            

    

     

    
      	
               
      

            	
              (v)

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

            

    

     

    
      	
               
      

            	
              (vi)

            	
              a
      Relevant Person petitions a court, or presents any proposal for, any form
      of judicial or non-judicial suspension or deferral of payments,
      reorganisation of its debt (or certain of its debt) or arrangement with
      all or a substantial proportion (by

            

    

     

    
      
         

      

      
        50

        
          

        

      

      
         

      

    

    number
or value) of its creditors or of any class of them or any such suspension or
deferral of payments, reorganisation or arrangement is effected by court order,
contract or otherwise; or

     

    
      	
               
      

            	
              (vii)

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

            

    

     

    
       

      
        	
                 
      

              	
                (viii)

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

                

              

      

    

     

    
      	
              (h)

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

            

    

     

    
      	
              (i)

            	
              it
      becomes unlawful in any Pertinent Jurisdiction or
    impossible:

            

    

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

    
      	
              (j)

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

            

    

     

    
      	
              (k)

            	
              without
      the prior written consent of the Majority Lenders, Mr Michael Bodouroglou
      ceases to be the Chief Executive Officer of the Borrower or at any time he
      owns less than 10 per cent. of the issued share capital of the Borrower;
      or

            

    

     

    
      	
              (l)

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

            

    

     

    
      	
              (m)

            	
              the
      Borrower’s shares cease to be quoted on Nasdaq;
  or

            

    

     

    
      	
              (n)

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

            

    

     

    
      	
              (o)

            	
              any
      charterparty which is the subject of a Charterparty Assignment is
      terminated or ceases to remain in full force and effect for any reason
      (other than through the effluxion of time);
or

            

    

     

    
      	
              (p)

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

            

    

     

    
      	
              (q)

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

            

    

     

    
      
         

      

      
        51

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
              (r)

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

            

    

     

    
      	
              19.2

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

            	
              serve
      on the Borrower a notice stating that the Loan, all accrued interest and
      all other amounts accrued or owing under this Agreement are immediately
      due and payable or are due and payable on demand;
  and/or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              take
      any other action which, as a result of the Event of Default or any notice
      served under paragraph (i) or (ii) above, the Agent and/or the Lenders are
      entitled to take under any Finance Document or any applicable law;
      and/or

            

    

     

    
      	
              (b)

            	
              the
      Security Trustee may, and if so instructed by the Agent, acting with the
      authorisation of the Majority Lenders, the Security Trustee shall take any
      action which, as a result of the Event of Default or any notice served
      under paragraph (a) (i) or (ii) above, the Security Trustee, the Agent
      and/or the Lenders are entitled to take under any Finance Document or any
      applicable law.

            

    

     

    
      	
              19.3

            	
              Termination of
      Commitments.  On the service of a notice under paragraph
      (a)(i) of Clause 19.2, the Commitments and all other obligations of each
      Lender to the Borrower under this Agreement shall
    terminate.

            

    

     

    
      	
              19.4

            	
              Acceleration of
      Loan.  On the service of a notice under paragraph (a)(ii)
      of Clause 19.2, the Loan, all accrued interest and all other amounts
      accrued or owing from the Borrower or any Security Party under this
      Agreement and every other Finance Document shall become immediately due
      and payable or, as the case may be, payable on
  demand.

            

    

     

    
      	
              19.5

            	
              Multiple notices; action
      without notice.  The Agent may serve notices under
      paragraphs (a) (i) and (ii) of Clause 19.2 simultaneously or on different
      dates and it and/or the Security Trustee may take any action referred to
      in that Clause if no such notice is served or simultaneously with or at
      any time after the service of both or either of such
    notices.

            

    

     

    
      	
              19.6

            	
              Notification of Creditor
      Parties and Security Parties.  The Agent shall send to
      each Lender, the Security Trustee and each Security Party a copy of the
      text of any notice which the Agent serves on the Borrower under Clause
      19.2; but the notice shall become effective when it is served on the
      Borrower, and no failure or delay by the Agent to send
  a

            

    

     

    
      
         

      

      
        52

        
          

        

      

      
         

      

    

    copy
of the text of the notice to any other person shall invalidate the notice or
provide the Borrower or any Security Party with any form of claim or
defence.

     

    
      	
              19.7

            	
              Lender's rights
      unimpaired.  Nothing in this Clause shall be taken to
      impair or restrict the exercise of any right given to individual Lenders
      under a Finance Document or the general law; and, in particular, this
      Clause is without prejudice to Clause
3.1.

            

    

     

    
      	
              19.8

            	
              Exclusion of Creditor Party
      Liability.  No Creditor Party, and no receiver or manager
      appointed by the Security Trustee, shall have any liability to the
      Borrower or a Security Party:

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
              19.9

            	
              Relevant
      Persons.  In this Clause 19 “a Relevant Person” means
      the Borrower, a Security Party and any other member of the Group; but
      excluding any company which is dormant and the value of whose gross assets
      is $50,000 or less.

            

    

     

    
      	
              19.10

            	
              Interpretation.  In
      Clause 19.1(f) references to an event of default or a termination event
      include any event, howsoever described, which is similar to an event of
      default in a facility agreement or a termination event in a finance lease;
      and in Clause 19.1(g) “petition” includes an
  application.

            

    

     

    
      	
              19.11

            	
              Position of the Swap
      Bank.  Neither the Agent nor the Security Trustee shall
      be obliged, in connection with any action taken or proposed to be taken
      under or pursuant to the foregoing provisions of this Clause 19, to have
      any regard to the requirements of the Swap Bank except to the extent that
      the Swap Bank is also a Lender.

            

    

     

    
      	
              20

            	
              FEES
      AND EXPENSES

            

    

     

    
      	
              20.1

            	
              Commitment, agency,
      participation and facility fees.  The Borrower shall pay
      to the Agent:

            

    

     

    
      	
              (a)

            	
              a
      commitment fee for distribution among the Lenders pro rata to their
      Commitments at the rate of 0.375 per cent. per annum on the amount of the
      Total Commitments less the amount of the Loan for the period from (and
      including) 12 November 2007 (being the date of the Agent’s commitment
      letter to the Borrower) date of this Agreement up to and including the
      earlier of (i) the Drawdown Date in respect of the final Advance and (ii)
      the last day of the Availability Period, such fee to be paid quarterly in
      arrears and on the last day of such
period;

            

    

     

    
      	
              (b)

            	
              on
      the date of this Agreement and on each anniversary thereof, an agency fee
      in an amount equal to the higher of (i) $15,000 and (ii) $2,500 multiplied
      by the number of Ships subject to a Mortgage at the relevant time (which,
      on the date of this Agreement, shall be construed to mean the Existing
      Ships), such agency fee to be payable in advance for the sole account of
      the Agent;

            

    

     

    
      
         

      

      
        53

        
          

        

      

      
         

      

    

    

     

    
      	
              (c)

            	
              on
      the date of this Agreement, a participation fee for distribution among the
      Lenders pro rata to their Commitments at the rate of 0.25 per cent. of the
      amount of the Total Commitments (being $250,000);
  and

            

    

     

    
      	
              (d)

            	
              such
      other facility fees as are referred to in the Fee Letter, such fees being
      payable at the times and in the manner referred to in the Fee
      Letter.

            

    

     

    
      	
              20.2

            	
              Costs of negotiation,
      preparation etc.  The Borrower shall pay to the Agent on
      its demand the amount of all expenses incurred by the Agent or the
      Security Trustee in connection with the negotiation, preparation,
      execution or registration of any Finance Document or any related document
      or with any transaction contemplated by a Finance Document or a related
      document (including, without limitation, any legal fees (which shall
      include, for the avoidance of doubt, the fees incurred by the Agent with
      respect to the legal opinions referred to in Schedule 4) or out of pocket
      expenses and printing expenses).

            

    

     

    
      	
              20.3

            	
              Costs of variations,
      amendments, enforcement etc.  The Borrower shall pay to
      the Agent, on the Agent's demand, the amount of all expenses (including,
      without limitation, any legal fees or expenses) incurred by a Lender in
      connection with:

            

    

     

    
      	
              (a)

            	
              any
      amendment or supplement to a Finance Document, or any proposal for such an
      amendment to be made;

            

    

     

    
      	
              (b)

            	
              any
      consent or waiver by the Lenders, the Majority Lenders or the Lender
      concerned under or in connection with a Finance Document, or any request
      for such a consent or waiver;

            

    

     

    
      	
              (c)

            	
              the
      valuation of any security provided or offered under Clause 15 or any other
      matter relating to such security;

            

    

     

    
      	
              (d)

            	
              such
      circumstances where the Agent, in its absolute opinion, considers that
      there has been a material change to the insurances in respect of a Ship,
      the review of the insurances of that Ship pursuant to Clause
      13.18;

            

    

     

    
      	
              (e)

            	
              any
      step taken by the Lender concerned or the Swap Bank concerned with a view
      to the protection, exercise or enforcement of any right or Security
      Interest created by a Finance Document or for any similar
      purpose.

            

    

     

    
      	
               
      

            	
              There
      shall be recoverable under paragraph (e) the full amount of all legal
      expenses, whether or not such as would be allowed under rules of court or
      any taxation or other procedure carried out under such
    rules.

            

    

     

    
      	
              20.4

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

            

    

     

    
      	
              20.5

            	
              Certification of
      amounts.  A notice which is signed by two officers of a
      Creditor Party, which states that a specified amount, or aggregate amount,
      is due to that Creditor Party under this Clause 20 and which indicates
      (without necessarily specifying a detailed breakdown) the matters in
      respect of which the amount, or aggregate amount, is due shall be prima
      facie evidence that the amount, or aggregate amount, is
    due.

            

    

     

    
      
         

      

      
        54

        
          

        

      

      
         

      

    

    

     

    
      	
              21

            	
              INDEMNITIES

            

    

     

    
      	
              21.1

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

            

    

     

    
      	
              (a)

            	
              an
      Advance not being borrowed on the date specified in the Drawdown Notice
      for that Advance for any reason other than a default by the Lender
      claiming the indemnity;

            

    

     

    
      	
              (b)

            	
              the
      receipt or recovery of all or any part of the Loan or an overdue sum
      otherwise than on the last day of an Interest Period or other relevant
      period;

            

    

     

    
      	
              (c)

            	
              any
      failure (for whatever reason) by the Borrower to make payment of any
      amount due under a Finance Document on the due date or, if so payable, on
      demand (after giving credit for any default interest paid by the Borrower
      on the amount concerned under Clause
7);

            

    

     

    
      	
              (d)

            	
              the
      occurrence and/or continuance of an Event of Default or a Potential Event
      of Default and/or the acceleration of repayment of the Loan under Clause
      19;

            

    

     

    
      	
               
      

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

            

    

     

    
      	
              21.2

            	
              Breakage
      costs.  Without limiting its generality, Clause 21.1
      covers any liability, expense or loss, including a loss of a prospective
      profit, incurred by a Lender:

            

    

     

    
      	
              (a)

            	
              in
      liquidating or employing deposits from third parties acquired or arranged
      to fund or maintain all or any part of its Contribution and/or any overdue
      amount (or an aggregate amount which includes its Contribution or any
      overdue amount); and

            

    

     

    
      	
              (b)

            	
              in
      terminating, or otherwise in connection with, any interest and/or currency
      swap or any other transaction entered into (whether with another legal
      entity or with another office or department of the Lender concerned) to
      hedge any exposure arising under this Agreement or that part which the
      Lender concerned determines is fairly attributable to this Agreement of
      the amount of the liabilities, expenses or losses (including losses of
      prospective profits) incurred by it in terminating, or otherwise in
      connection with, a number of transactions of which this Agreement is
      one.

            

    

     

    
      	
              21.3

            	
              Miscellaneous
      indemnities.  The Borrower shall fully indemnify each
      Creditor Party severally on their respective demands in respect of all
      claims, demands, proceedings, liabilities, taxes, losses and expenses of
      every kind (“liability
      items”) which may be made or brought against, or incurred by, the
      relevant Creditor Party, in any country, in relation
  to:

            

    

     

    
      	
              (a)

            	
              any
      action taken, or omitted or neglected to be taken, under or in connection
      with any Finance Document by the Agent, the Security Trustee or any other
      Creditor Party or by any receiver appointed under a Finance
      Document;

            

    

     

    
      	
              (b)

            	
              any
      other event, matter or question which occurs or arises at any time during
      the Security Period and which has any connection with, or any bearing on,
      any Finance Document, any payment or other transaction relating to a
      Finance Document or any asset covered (or previously covered) by a
      Security Interest created (or intended to be created) by a Finance
      Document;

            

    

     

    
      
         

      

      
        55

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

            	
              other
      than liability items which are shown to have been caused by the gross
      negligence or the wilful misconduct of the relevant Creditor Party’s own
      officers or employees.

            

    

     

    
      	
              21.4

            	
              Extension of indemnities;
      environmental indemnity.  Without prejudice to its
      generality, Clause 21.3 covers:

            

    

     

    
      	
              (a)

            	
              any
      matter which would be covered by Clause 21.3 if any of the references in
      that Clause to a Lender were a reference to the Agent or (as the case may
      be) to the Security Trustee; and

            

    

     

    
      	
              (b)

            	
              any
      liability items which arise, or are asserted, under or in connection with
      any law relating to safety at sea, pollution, the protection of the
      environment, the ISM Code or the ISPS
Code.

            

    

     

    
      	
              21.5

            	
              Currency
      indemnity.  If any sum due from the Borrower or any
      Security Party to a Creditor Party under a Finance Document or under any
      order or judgment relating to a Finance Document has to be converted from
      the currency in which the Finance Document provided for the sum to be paid
      (the “Contractual
      Currency”) into another currency (the “Payment Currency”) for
      the purpose of:

            

    

     

    
      	
              (a)

            	
              making
      or lodging any claim or proof against the Borrower or any Security Party,
      whether in its liquidation, any arrangement involving it or otherwise;
      or

            

    

     

    
      	
              (b)

            	
              obtaining
      an order or judgment from any court or other tribunal;
  or

            

    

     

    
      	
              (c)

            	
              enforcing
      any such order or judgment;

            

    

     

    
      	
               
      

            	
              the
      Borrower shall indemnify the Creditor Party concerned against the loss
      arising when the amount of the payment actually received by that Creditor
      Party is converted at the available rate of exchange into the Contractual
      Currency.

            

    

     

    
      	
               
      

            	
              In
      this Clause 21.5, the “available rate of
      exchange” means the rate at which the Creditor Party concerned is
      able at the opening of business (Hamburg time) on the Business Day after
      it receives the sum concerned to purchase the Contractual Currency with
      the Payment Currency.

            

    

     

    
      	
               
      

            	
              This
      Clause 21.5 creates a separate liability of the Borrower which is distinct
      from its other liabilities under the Finance Documents and which shall not
      be merged in any judgment or order relating to those other
      liabilities.

            

    

     

    
      	
              21.6

            	
              Certification of
      amounts.  A notice which is signed by 2 officers of a
      Creditor Party, which states that a specified amount, or aggregate amount,
      is due to that Creditor Party under this Clause 21 and which indicates
      (without necessarily specifying a detailed breakdown) the matters in
      respect of which the amount, or aggregate amount, is due shall be prima
      facie evidence that the amount, or aggregate amount, is
    due.

            

    

     

    
      	
              21.7

            	
              Sums deemed due to a
      Lender.  For the purposes of this Clause 21, a sum
      payable by the Borrower to the Agent or the Security Trustee for
      distribution to a Lender shall be treated as a sum due to that
      Lender.

            

    

     

    
      	
              21.8

            	
              Application to Master
      Agreement.  For the avoidance of doubt, Clause 21.5 does
      not apply in respect of sums due from the Borrower to the Swap Bank under
      or in connection with the Master Agreement as to which sums the provisions
      of section 8 (Contractual Currency) of the Master Agreement shall
      apply.

            

    

     

    
      
         

      

      
        56

        
          

        

      

      
         

      

    

    

     

    
      	
              22

            	
              NO
      SET-OFF OR TAX DEDUCTION

            

    

     

    
      	
              22.1

            	
              No
      deductions.  All amounts due from the Borrower under a
      Finance Document shall be paid:

            

    

     

    
      	
              (a)

            	
              without
      any form of set-off, cross-claim or condition;
  and

            

    

     

    
      	
              (b)

            	
              free
      and clear of any tax deduction except a tax deduction which the Borrower
      is required by law to make.

            

    

     

    
      	
              22.2

            	
              Grossing-up for
      taxes.  If the Borrower is required by law to make a tax
      deduction from any payment:

            

    

     

    
      	
              (a)

            	
              the
      Borrower shall notify the Agent as soon as it becomes aware of the
      requirement;

            

    

     

    
      	
              (b)

            	
              the
      Borrower shall pay the tax deducted to the appropriate taxation authority
      promptly, and in any event before any fine or penalty
    arises;

            

    

     

    
      	
              (c)

            	
              the
      amount due in respect of the payment shall be increased by the amount
      necessary to ensure that each Creditor Party receives and retains (free
      from any liability relating to the tax deduction) a net amount which,
      after the tax deduction, is equal to the full amount which it would
      otherwise have received.

            

    

     

    
      	
              22.3

            	
              Evidence of payment of
      taxes.  Within 1 month after making any tax deduction,
      the Borrower concerned shall deliver to the Agent documentary evidence
      satisfactory to the Agent that the tax had been paid to the appropriate
      taxation authority.

            

    

     

    
      	
              22.4

            	
              Exclusion of tax on overall net
      income.  In this Clause 22 “tax deduction” means any
      deduction or withholding for or on account of any present or future tax
      except tax on a Creditor Party's overall net
  income.

            

    

     

    
      	
              22.5

            	
              Application to the Master
      Agreement.  For the avoidance of doubt, Clause 22 does
      not apply in respect of sums due from the Borrower to the Swap Bank under
      or in connection with the Master Agreement as to which sums the provisions
      of section 2(d) (Deduction or Withholding for Tax) of the Master Agreement
      shall apply.

            

    

     

    
      	
              23

            	
              ILLEGALITY,
      ETC

            

    

     

    
      	
              23.1

            	
              Illegality.  This
      Clause 23 applies if a Lender (the “Notifying Lender”)
      notifies the Agent that it has become, or will with effect from a
      specified date, become:

            

    

     

    
      	
              (a)

            	
              unlawful
      or prohibited as a result of the introduction of a new law, an amendment
      to an existing law or a change in the manner in which an existing law is
      or will be interpreted or applied;
or

            

    

     

    
      	
              (b)

            	
              contrary
      to, or inconsistent with, any
regulation,

            

    

     

    
      	
               
      

            	
              for
      the Notifying Lender to maintain or give effect to any of its obligations
      under this Agreement in the manner contemplated by this
      Agreement.

            

    

     

    
      	
              23.2

            	
              Notification of
      illegality.  The Agent shall promptly notify the
      Borrower, the Security Parties, the Security Trustee and the other Lenders
      of the notice under Clause 23.1 which the Agent receives from the
      Notifying Lender.

            

    

     

    
      	
              23.3

            	
              Prepayment; termination of
      Commitment.  On the Agent notifying the Borrower under
      Clause 23.2, the Notifying Lender's Commitment shall terminate; and
      thereupon or, if

            

    

     

    
      
         

      

      
        57

        
          

        

      

      
         

      

    

    later,
on the date specified in the Notifying Lender's notice under Clause 23.1 as the
date on which the notified event would become effective the Borrower shall
prepay the Notifying Lender's Contribution in accordance with Clause
8.

     

    
      	
              23.4

            	
              Mitigation.  If
      circumstances arise which would result in a notification under
      Clause 23.1 then, without in any way limiting the rights of the
      Notifying Lender under Clause 23.3, the Notifying Lender shall use
      reasonable endeavours to transfer its obligations, liabilities and rights
      under this Agreement and the Finance Documents to another office or
      financial institution not affected by the circumstances but the Notifying
      Lender shall not be under any obligation to take any such action if, in
      its opinion, to do would or might:

            

    

     

    
      	
              (a)

            	
              have
      an adverse effect on its business, operations or financial condition;
      or

            

    

     

    
      	
              (b)

            	
              involve
      it in any activity which is unlawful or prohibited or any activity that is
      contrary to, or inconsistent with, any regulation;
  or

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              24

            	
              INCREASED
      COSTS

            

    

     

    
      	
              24.1

            	
              Increased
      costs.  This Clause 24 applies if a Lender (the “Notifying Lender”)
      notifies the Agent that the Notifying Lender considers that as a result
      of:

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

            	
              the
      effect of complying with any law or regulation (including any which
      relates to capital adequacy or liquidity controls or which affects the
      manner in which the Notifying Lender allocates capital resources to its
      obligations under this Agreement (including, without limitation, any laws
      or regulations which shall replace, amend and/or supplement those set out
      in the statement of the Basle Committee on Banking Regulations and
      Supervisory Practices dated July 1988 and entitled “International
      Convergence of Capital Management and Capital Structures”)) which is
      introduced, or altered, or the interpretation or application of which is
      altered, after the date of this
Agreement,

            

    

     

    
      	
               
      

            	
              is
      that the Notifying Lender (or a parent company of it) has incurred or will
      incur an “increased
      cost”, that is to say:

            

    

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

    
      	
               
      

            	
              (iii)

            	
              an
      additional or increased cost of funding all or maintaining all or any of
      the advances comprised in a class of advances formed by or including the
      Notifying Lender's Contribution or (as the case may require) the
      proportion of that cost attributable to the Contribution;
    or

            

    

     

    
      	
               
      

            	
              (iv)

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

            

    

     

    
      
         

      

      
        58

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

            	
              but
      not an item attributable to a change in the rate of tax on the overall net
      income of the Notifying Lender (or a parent company of it) or an item
      covered by the indemnity for tax in Clause 21.1 or by Clause
      22.

            

    

     

    
      	
               
      

            	
              For
      the purposes of this Clause 24.1 the Notifying Lender may in good faith
      allocate or spread costs and/or losses among its assets and liabilities
      (or any class thereof) on such basis as it considers
      appropriate.

            

    

     

    
      	
              24.2

            	
              Notification to Borrower of
      claim for increased costs.  The Agent shall promptly
      notify the Borrower and the Security Parties of the notice which the Agent
      received from the Notifying Lender under Clause
  24.1.

            

    

     

    
      	
              24.3

            	
              Payment of increased
      costs.  The Borrower shall pay to the Agent, at the end
      of any Interest Period during which the Agent makes demand, for the
      account of the Notifying Lender, the amounts which the Agent from time to
      time notifies the Borrower that the Notifying Lender has specified to be
      necessary to compensate the Notifying Lender for the increased
      cost.

            

    

     

    
      	
              24.4

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

            

    

     

    
      	
              24.5

            	
              Prepayment; termination of
      Commitment.  A notice under Clause 24.4 shall be
      irrevocable; the Agent shall promptly notify the Notifying Lender of the
      Borrower’s notice of intended prepayment;
and:

            

    

     

    
      	
              (a)

            	
              on
      the date on which the Agent serves that notice, the Commitment of the
      Notifying Lender shall be cancelled;
and

            

    

     

    
      	
              (b)

            	
              on
      the date specified in its notice of intended prepayment, the Borrower
      shall prepay (without premium or penalty) the Notifying Lender's
      Contribution, together with accrued interest thereon at the applicable
      rate plus the applicable Margin and the Mandatory Cost (if
      any).

            

    

     

    
      	
              24.6

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

            

    

     

    
      	
              25

            	
              SET-OFF

            

    

     

    
      	
              25.1

            	
              Application of credit
      balances.  Each Creditor Party may without prior
      notice:

            

    

     

    
      	
              (a)

            	
              apply
      any balance (whether or not then due) which at any time stands to the
      credit of any account in the name of the Borrower at any office in any
      country of that Creditor Party in or towards satisfaction of any sum then
      due from the Borrower to that Creditor Party under any of the Finance
      Documents; and

            

    

     

    
      	
              (b)

            	
              for
      that purpose:

            

    

     

    
      	
               
      

            	
              (i)

            	
              break,
      or alter the maturity of, all or any part of a deposit of the
      Borrower;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              convert
      or translate all or any part of a deposit or other credit balance into
      Dollars;

            

    

     

    
      	
               
      

            	
              (iii)

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

            

    

     

    
      
         

      

      
        59

        
          

        

      

      
         

      

    

    

     

    
      	
              25.2

            	
              Existing rights
      unaffected.  No Creditor Party shall be obliged to
      exercise any of its rights under Clause 25.1; and those rights shall be
      without prejudice and in addition to any right of set-off, combination of
      accounts, charge, lien or other right or remedy to which a Creditor Party
      is entitled (whether under the general law or any
    document).

            

    

     

    
      	
              25.3

            	
              Sums deemed due to a
      Lender.  For the purposes of this Clause 25, a sum
      payable by the Borrower to the Agent or the Security Trustee for
      distribution to, or for the account of, a Lender shall be treated as a sum
      due to that Lender; and each Lender's proportion of a sum so payable for
      distribution to, or for the account of, the Lenders shall be treated as a
      sum due to such Lender.

            

    

     

    
      	
              26

            	
              TRANSFERS
      AND CHANGES IN LENDING OFFICES

            

    

     

    
      	
              26.1

            	
              Transfer by
      Borrower.  The Borrower may not, without the prior
      written consent of the Agent, given on the instructions of all the
      Lenders:

            

    

     

    
      	
              (a)

            	
              transfer
      any of its rights or obligations under any Finance Document;
      or

            

    

     

    
      	
              (b)

            	
              enter
      into any merger, de-merger or other reorganisation, or carry out any other
      act, as a result of which any of its rights or liabilities would vest in,
      or pass to, another person.

            

    

     

    
      	
              26.2

            	
              Transfer by a
      Lender.  Subject to Clause 26.5, a Lender (the “Transferor Lender”) may
      at any time, cause:

            

    

     

    
      	
              (a)

            	
              its
      rights in respect of all or part of its Contribution;
  or

            

    

     

    
      	
              (b)

            	
              its
      obligations in respect of all or part of its Commitment;
  or

            

    

     

    
      	
              (c)

            	
              a
      combination of (a) and (b)

            

    

     

    
      	
               
      

            	
              to
      be (in the case of its rights) transferred to, or (in the case of its
      obligations) assumed by, another bank or financial institution which is
      experienced in ship financing (a “Transferee Lender”) by
      delivering to the Agent a completed certificate in the form set out in
      Schedule 4 with any modifications approved or required by the Agent (a
      “Transfer
      Certificate”) executed by the Transferor Lender and the Transferee
      Lender.

            

    

     

    
      	
               
      

            	
              However
      any rights and obligations of the Transferor Lender in its capacity as
      Agent or Security Trustee will have to be dealt with separately in
      accordance with the Agency and Trust
Deed.

            

    

     

    
      	
               
      

            	
              A
      transfer pursuant to this Clause 26.2
shall:

            

    

     

    
      	
               
      

            	
              (i)

            	
              require
      the prior written consent of the
Agent;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              be
      effected without the consent of, but with notice to, the Borrower and
      without any cost to the Borrower:

            

    

     

    
      	
               
      

            	
              (A)

            	
              following
      the occurrence of an Event of
Default;

            

    

     

    
      	
               
      

            	
              (B)

            	
              if
      such transfer is to a subsidiary or any other company or financial
      institution which is in the same ownership or control as the Transferor
      Lender; and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              require
      the consent of the Borrower (such consent not to be unreasonably withheld
      or delayed) in all circumstances (other than those referred to in
      sub-paragraph (ii) above).

            

    

     

    
      
         

      

      
        60

        
          

        

      

      
         

      

    

    

     

    
      	
              26.3

            	
              Transfer Certificate, delivery
      and notification.  As soon as reasonably practicable
      after a Transfer Certificate is delivered to the Agent, it shall (unless
      it has reason to believe that the Transfer Certificate may be
      defective):

            

    

     

    
      	
              (a)

            	
              sign
      the Transfer Certificate on behalf of itself, the Borrower, the Security
      Parties, the Security Trustee and each of the
  Lenders;

            

    

     

    
      	
              (b)

            	
              on
      behalf of the Transferee Lender, send to the Borrower and each Security
      Party letters or faxes notifying them of the Transfer Certificate and
      attaching a copy of it; and

            

    

     

    
      	
              (c)

            	
              send
      to the Transferee Lender copies of the letters or faxes sent under
      paragraph (b) above.

            

    

     

    
      	
              26.4

            	
              Effective Date of Transfer
      Certificate.  A Transfer Certificate becomes effective on
      the date, if any, specified in the Transfer Certificate as its effective
      date Provided that
      it is signed by the Agent under Clause 26.3 on or before that
      date.

            

    

     

    
      	
              26.5

            	
              No transfer without Transfer
      Certificate.  No assignment or transfer of any right or
      obligation of a Lender under any Finance Document is binding on, or
      effective in relation to, the Borrower, any Security Party, the Agent or
      the Security Trustee unless it is effected, evidenced or perfected by a
      Transfer Certificate.

            

    

     

    
      	
              26.6

            	
              Lender re-organisation; waiver
      of Transfer Certificate.  However, if a Lender enters
      into any merger, de-merger or other reorganisation as a result of which
      all its rights or obligations vest in another person (the “successor”), the
      successor shall automatically and without any further act being necessary
      become a Lender with the same Commitment and Contribution as were held by
      the predecessor Lender.

            

    

     

    
      	
              26.7

            	
              Effect of Transfer
      Certificate.  A Transfer Certificate takes effect in
      accordance with English law as
follows:

            

    

     

    
      	
              (a)

            	
              to
      the extent specified in the Transfer Certificate, all rights and interests
      (present, future or contingent) which the Transferor Lender has under or
      by virtue of the Finance Documents are assigned to the Transferee Lender
      absolutely, free of any defects in the Transferor Lender's title and of
      any rights or equities which the Borrower or any Security Party had
      against the Transferor Lender;

            

    

     

    
      	
              (b)

            	
              the
      Transferor Lender's Commitment is discharged to the extent specified in
      the Transfer Certificate;

            

    

     

    
      	
              (c)

            	
              the
      Transferee Lender becomes a Lender with the Contribution previously held
      by the Transferor Lender (or the part thereof specified in the Transfer
      Certificate) and a Commitment of an amount specified in the Transfer
      Certificate;

            

    

     

    
      	
              (d)

            	
              the
      Transferee Lender becomes bound by all the provisions of the Finance
      Documents which are applicable to the Lenders generally, including those
      about pro-rata sharing and the exclusion of liability on the part of, and
      the indemnification of, the Agent and the Security Trustee and, to the
      extent that the Transferee Lender becomes bound by those provisions (other
      than those relating to exclusion of liability), the Transferor Lender
      ceases to be bound by them;

            

    

     

    
      	
              (e)

            	
              any
      part of the Loan which the Transferee Lender advances after the Transfer
      Certificate's effective date ranks in point of priority and security in
      the same way as it would have ranked had it been advanced by the
      transferor, assuming that any defects in the transferor's title and any
      rights or equities of the Borrower or any Security Party against the
      Transferor Lender had not existed;

            

    

     

    
      
         

      

      
        61

        
          

        

      

      
         

      

    

    

     

    
      	
              (f)

            	
              the
      Transferee Lender becomes entitled to all the rights under the Finance
      Documents which are applicable to the Lenders generally, including but not
      limited to those relating to the Majority Lenders and those under Clause
      5.5 and Clause 20, and to the extent that the Transferee Lender becomes
      entitled to such rights, the Transferor Lender ceases to be entitled to
      them; and

            

    

     

    
      	
              (g)

            	
              in
      respect of any breach of a warranty, undertaking, condition or other
      provision of a Finance Document or any misrepresentation made in or in
      connection with a Finance Document, the Transferee Lender shall be
      entitled to recover damages by reference to the loss incurred by it as a
      result of the breach or misrepresentation, irrespective of whether the
      original Lender would have incurred a loss of that kind or
      amount.

            

    

     

    
      	
               
      

            	
              The
      rights and equities of the Borrower or any Security Party referred to
      above include, but are not limited to, any right of set off and any other
      kind of cross-claim.

            

    

     

    
      	
              26.8

            	
              Maintenance of register of
      Lenders.  During the Security Period the Agent shall
      maintain a register in which it shall record the name, Commitment,
      Contribution and administrative details (including the lending office)
      from time to time of each Lender holding a Transfer Certificate and the
      effective date (in accordance with Clause 26.4) of the Transfer
      Certificate; and the Agent shall make the register available for
      inspection by any Lender, the Security Trustee and the Borrower during
      normal banking hours, subject to receiving at least 5 Business Days prior
      notice.

            

    

     

    
      	
              26.9

            	
              Reliance on register of
      Lenders.  The entries on that register shall, in the
      absence of manifest error, be conclusive in determining the identities of
      the Lenders and the amounts of their Commitments and Contributions and the
      effective dates of Transfer Certificates and may be relied upon by the
      Agent and the other parties to the Finance Documents for all purposes
      relating to the Finance Documents.

            

    

     

    
      	
              26.10

            	
              Authorisation of Agent to sign
      Transfer Certificates.  The Borrower, the Security
      Trustee and each Lender irrevocably authorise the Agent to sign Transfer
      Certificates on its behalf.

            

    

     

    
      	
              26.11

            	
              Registration
      fee.  In respect of any Transfer Certificate, the Agent
      shall be entitled to recover a registration fee of $2,000 from the
      Transferor Lender or (at the Agent's option) the Transferee
      Lender.

            

    

     

    
      	
              26.12

            	
              Sub-participation; subrogation
      assignment.  A Lender may sub-participate all or any part
      of its rights and/or obligations under or in connection with the Finance
      Documents without the consent of, or any notice to, the Borrower, any
      Security Party, the Agent or the Security Trustee; and the Lenders may
      assign, in any manner and terms agreed by the Majority Lenders, the Agent
      and the Security Trustee, all or any part of those rights to an insurer or
      surety who has become subrogated to
them.

            

    

     

    
      	
              26.13

            	
              Disclosure of
      information.  A Lender may disclose to a potential
      Transferee Lender or sub-participant any information which the Lender has
      received in relation to the Borrower, any Security Party or their affairs
      under or in connection with any Finance Document, unless the information
      is clearly of a confidential
nature.

            

    

     

    
      	
              26.14

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

            

    

     

    
      	
              (a)

            	
              the
      date on which the Agent receives the notice;
and

            

    

     

    
      	
              (b)

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

            

    

     

    
      
         

      

      
        62

        
          

        

      

      
         

      

    

    

     

    
      	
              26.15

            	
              Notification.  On
      receiving such a notice, the Agent shall notify the Borrower and the
      Security Trustee; and, until the Agent receives such a notice, it shall be
      entitled to assume that a Lender is acting through the lending office of
      which the Agent last had notice.

            

    

     

    
      	
              27

            	
              VARIATIONS
      AND WAIVERS

            

    

     

    
      	
              27.1

            	
              Variations, waivers etc. by
      Majority Lenders.  Subject to Clause 27.2, a document
      shall be effective to vary, waive, suspend or limit any provision of a
      Finance Document, or any Creditor Party's rights or remedies under such a
      provision or the general law, only if the document is signed, or
      specifically agreed to by fax, by the Borrower, by the Agent on behalf of
      the Majority Lenders, by the Agent and the Security Trustee in their own
      rights, and, if the document relates to a Finance Document to which a
      Security Party is party, by that Security
Party.

            

    

     

    
      	
              27.2

            	
              Variations, waivers etc.
      requiring agreement of all Lenders.  However, as regards
      the following, Clause 27.1 applies as if the words “by the Agent on behalf
      of the Majority Lenders” were replaced by the words “by or on behalf of
      every Lender and the Swap Bank”:

            

    

     

    
      	
              (a)

            	
              a
      change in the applicable Margin or in the definition of
    LIBOR;

            

    

     

    
      	
              (b)

            	
              a
      change to the date for, or the amount of, any payment of principal,
      interest, fees, or other sum payable under this
  Agreement;

            

    

     

    
      	
              (c)

            	
              a
      change to any Lender's Commitment;

            

    

     

    
      	
              (d)

            	
              an
      extension of the Availability
Period;

            

    

     

    
      	
              (e)

            	
              a
      change to the definition of “Majority Lenders” or “Finance
      Documents”;

            

    

     

    
      	
              (f)

            	
              a
      change to the preamble or to Clause 2, 3, 4, 5.1, 8.1, 8.2, 17, 18, 19 or
      30;

            

    

     

    
      	
              (g)

            	
              a
      change to this Clause 27;

            

    

     

    
      	
              (h)

            	
              any
      release of, or material variation to, a Security Interest, guarantee,
      indemnity or subordination arrangement set out in a Finance Document;
      and

            

    

     

    
      	
              (i)

            	
              any
      other change or matter as regards which this Agreement or another Finance
      Document expressly provides that each Lender's consent is
      required.

            

    

     

    
      	
              27.3

            	
              Exclusion of other or implied
      variations.  Except for a document which satisfies the
      requirements of Clauses 27.1 and 27.2, no document, and no act, course of
      conduct, failure or neglect to act, delay or acquiescence on the part of
      the Creditor Parties or any of them (or any person acting on behalf of any
      of them) shall result in the Creditor Parties or any of them (or any
      person acting on behalf of any of them) being taken to have varied,
      waived, suspended or limited, or being precluded (permanently or
      temporarily) from enforcing, relying on or
  exercising:

            

    

     

    
      	
              (a)

            	
              a
      provision of this Agreement or another Finance Document;
  or

            

    

     

    
      	
              (b)

            	
              an
      Event of Default; or

            

    

     

    
      	
              (c)

            	
              a
      breach by the Borrower or a Security Party of an obligation under a
      Finance Document or the general law;
or

            

    

     

    
      	
              (d)

            	
              any
      right or remedy conferred by any Finance Document or by the general
      law;

            

    

     

    
      
         

      

      
        63

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

            	
              and
      there shall not be implied into any Finance Document any term or condition
      requiring any such provision to be enforced, or such right or remedy to be
      exercised, within a certain or reasonable
time.

            

    

     

    
      	
              28

            	
              NOTICES

            

    

     

    
      	
              28.1

            	
              General.  Unless
      otherwise specifically provided, any notice under or in connection with
      any Finance Document shall be given by registered letter or fax; and
      references in the Finance Documents to written notices, notices in writing
      and notices signed by particular persons shall be construed
      accordingly.

            

    

     

    
      	
              28.2

            	
              Addresses for
      communications.  A notice shall be
  sent:

            

    

     

    
      	
              (a)

            	
              to
      the Borrower:

            	
              Paragon
      Shipping Inc.

              15 Karamanli Avenue

              166 73 Voula

              Greece

              Fax No: +(30) 210 899 5085

              Attn: the Chief Financial
Officer

            

    

     

    
      	
              (b)

            	
              to
      a Lender:

            	
              At
      the address opposite its name in Schedule 1 or (as the case may require)
      in the relevant Transfer Certificate;
and

            

    

     

    
      	
              (c)

            	
              the
      Agent and 

                the
      Security Trustee:

              

            	
              Bayerische
      Hypo-und Vereinsbank AG 

                62,
      Notara Street

              

            

    

    
      	
               
      

            	
               

            	
              
                185
      35 Piraeus

              

            

    

    
      	
               
      

            	
              
                Greece

              

            

    

    
      	
               
      

            	
              Fax
      No: +30 210 412 6597

              Attn: Vassilis Matzavinos/Periclis
  Lycoudis

            

    

     

    
      	
               
      

            	
              or
      to such other address as the relevant party may notify the Agent or, if
      the relevant party is the Agent or the Security Trustee, the Borrower, the
      Lenders and the Security Parties.

            

    

     

    
      	
              28.3

            	
              Effective date of
      notices.  Subject to Clauses 28.4 and
    28.5:

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

            	
              a
      notice which is delivered by registered letter shall be deemed to be
      served, and shall take effect, 5 Business Days after being deposited in
      the post postage prepaid in an envelope addressed to it at the relevant
      address; and

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              28.4

            	
              Service outside business
      hours.  However, if under Clause 28.3 a notice would be
      deemed to be served:

            

    

     

    
      	
              (a)

            	
              on
      a day which is not a business day in the place of receipt;
    or

            

    

     

    
      	
              (b)

            	
              on
      such a business day, but after 5 p.m. local
  time;

            

    

     

    
      	
               
      

            	
              the
      notice shall (subject to Clause 28.5) be deemed to be served, and shall
      take effect, at 9 a.m. on the next day which is such a business
      day.

            

    

     

    
      
         

      

      
        64

        
          

        

      

      
         

      

    

    

     

    
      	
              28.5

            	
              Illegible
      notices.  Clauses 28.3 and 28.4 do not apply if the
      recipient of a notice notifies the sender within one hour after the time
      at which the notice would otherwise be deemed to be served that the notice
      has been received in a form which is illegible in a material
      respect.

            

    

     

    
      	
              28.6

            	
              Valid
      notices.  A notice under or in connection with a Finance
      Document shall not be invalid by reason that its contents or the manner of
      serving it do not comply with the requirements of this Agreement or, where
      appropriate, any other Finance Document under which it is served
      if:

            

    

     

    
      	
              (a)

            	
              the
      failure to serve it in accordance with the requirements of this Agreement
      or other Finance Document, as the case may be, has not caused any party to
      suffer any significant loss or
  prejudice;  or

            

    

     

    
      	
              (b)

            	
              in
      the case of incorrect and/or incomplete contents, it should have been
      reasonably clear to the party on which the notice was served what the
      correct or missing particulars should have
been.

            

    

     

    
      	
              28.7

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

            

    

     

    
      	
              28.8

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

            

    

     

    
      	
              28.9

            	
              Electronic
      communication

            

    

     

    
      	
              (a)

            	
              Any
      communication to be made between the Agent or the Security Trustee and a
      Lender or the Swap Bank under or in connection with the Finance Documents
      may be made by electronic mail or other electronic means, if the Agent,
      the Security Trustee and the relevant Lender or the Swap
    Bank:

            

    

     

    
      	
               
      

            	
              (i)

            	
              agree
      that, unless and until notified to the contrary, this is to be an accepted
      form of communication;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              notify
      each other in writing of their electronic mail address and/or any other
      information required to enable the sending and receipt of information by
      that means; and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              notify
      each other of any change to their address or any other such information
      supplied by them.

            

    

     

    
      	
              (b)

            	
              Any
      electronic communication made between the Agent and a Lender or the
      Security Trustee or the Swap Bank will be effective only when actually
      received in readable form and in the case of any electronic communication
      made by a Lender or the Swap Bank to the Agent or the Security Trustee
      only if it is addressed in such a manner as the Agent or Security Trustee
      shall specify for this purpose.

            

    

     

    
      	
              29

            	
              SUPPLEMENTAL

            

    

     

    
      	
              29.1

            	
              Rights cumulative,
      non-exclusive.  The rights and remedies which the Finance
      Documents give to each Creditor Party
are:

            

    

     

    
      	
              (a)

            	
              cumulative;

            

    

     

    
      	
              (b)

            	
              may
      be exercised as often as appears expedient;
and

            

    

     

    
      
         

      

      
        65

        
          

        

      

      
         

      

    

    

     

    
      	
              (c)

            	
              shall
      not, unless a Finance Document explicitly and specifically states so, be
      taken to exclude or limit any right or remedy conferred by any
      law.

            

    

     

    
      	
              29.2

            	
              Severability of
      provisions.  If any provision of a Finance Document is or
      subsequently becomes void, unenforceable or illegal, that shall not affect
      the validity, enforceability or legality of the other provisions of that
      Finance Document or of the provisions of any other Finance
      Document.

            

    

     

    
      	
              29.3

            	
              Third party
      rights.  A person who is not a party to this Agreement
      has no right under the Contracts (Rights of Third Parties) Act 1999 to
      enforce or to enjoy the benefit of any term of this
    Agreement.

            

    

     

    
      	
              29.4

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

            

    

     

    
      	
              30

            	
              LAW
      AND JURISDICTION

            

    

     

    
      	
              30.1

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

            

    

     

    
      	
              30.2

            	
              Exclusive English
      jurisdiction.  Subject to Clause 30.3, the courts of
      England shall have exclusive jurisdiction to settle any disputes which may
      arise out of or in connection with this
  Agreement.

            

    

     

    
      	
              30.3

            	
              Choice of forum for the
      exclusive benefit of the Creditor Parties.  Clause 30.2
      is for the exclusive benefit of the Creditor Parties, each of which
      reserves the right:

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
               
      

            	
              The
      Borrower shall not commence any proceedings in any country other than
      England in relation to a matter which arises out of or in connection with
      this Agreement.

            

    

     

    
      	
              30.4

            	
              Process
      Agent.  The Borrower irrevocably appoints HTD Services
      Limited at their office for the time being, presently at Irongate House,
      Duke’s Place, London EC3A 7HX, England, to act as its Agent to receive and
      accept on its behalf any process or other document relating to any
      proceedings in the English courts which are connected with this
      Agreement.

            

    

     

    
      	
              30.5

            	
              Creditor Party rights
      unaffected.  Nothing in this Clause 30 shall exclude or
      limit any right which any Creditor Party may have (whether under the law
      of any country, an international convention or otherwise) with regard to
      the bringing of proceedings, the service of process, the recognition or
      enforcement of a judgment or any similar or related matter in any
      jurisdiction.

            

    

     

    
      	
              30.6

            	
              Meaning of
      “proceedings”.  In this Clause 30, “proceedings” means
      proceedings of any kind, including an application for a provisional or
      protective measure.

            

    

     

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

     

    
      
         

      

      
        66

        
          

        

      

      
         

      

    

    

    SCHEDULE
1

     

    LENDERS
AND COMMITMENTS

     

    

    
      	
              Lender

            	
              Lending
      Office

            	
              Commitment

              (US
      Dollars)

               

            
	
              Bayerische
      Hypo-und Vereinsbank AG

            	
              62
      Notara Street

              185
      35 Piraeus

              Greece

               

            	
              100,000,000

            

    

    

    

    

     

    
      
         

      

      
        67

        
          

        

      

      
         

      

    

    SCHEDULE
2

     

    DETAILS
OF EXISTING SHIPS AND OWNERS

    
 

    
      
        	
                1

              	
                Name
      of Ship:

              	
                “CALM
      SEAS”

              
	 
      	 
      	 
      
	 
      	
                Flag:

              	
                Marshall
      Islands

              
	 
      	 
      	 
      
	 
      	
                IMO
      Number:

              	
                9184835

              
	 
      	 
      	 
      
	 
      	
                Official
      Number:

              	
                2294

              
	 
      	 
      	 
      
	 
      	
                Dwt:

              	
                74,047

              
	 
      	 
      	 
      
	 
      	
                Class
      Society and notation:

              	
                Nippon
      Kaiji Kyokai NS* (Bulk Carrier, Strengthen for Heavy Cargoes Nos 2,4 &
      6 Holds may be empty) (ESP) MNS*

              
	 
      	 
      	 
      
	 
      	
                Year
      built:

              	
                1999

              
	 
      	 
      	 
      
	 
      	
                Owner:

              	
                Frontline
      Marine Company

              
	 
      	 
      	 
      
	
                2

              	
                Name
      of Ship:

              	
                “DEEP
      SEAS”

              
	 
      	 
      	 
      
	 
      	
                Flag:

              	
                Cayman
      Islands

              
	 
      	 
      	 
      
	 
      	
                IMO
      Number:

              	
                9169380

              
	 
      	 
      	 
      
	 
      	
                Official
      Number:

              	
                739719

              
	 
      	 
      	 
      
	 
      	
                Dwt:

              	
                72,891

              
	 
      	 
      	 
      
	 
      	
                Class
      Society and notation:

              	
                Nippon
      Kaiji Kyokai NS(Bulk Carrier, Strengthen for Heavy Cargoes Nos 2,4 & 6
      Holds may be empty) (ESP) MNS

              
	 
      	 
      	 
      
	 
      	
                Year
      built:

              	
                1999

              
	 
      	 
      	 
      
	 
      	
                Owner:

              	
                Trade
      Force Shipping S.A.

              
	 
      	 
      	 
      
	
                3

              	
                Name
      of Ship:

              	
                “CRYSTAL
      SEAS”

              
	 
      	 
      	 
      
	 
      	
                Flag:

              	
                Liberia

              
	 
      	 
      	 
      
	 
      	
                IMO
      Number:

              	
                9114153

              
	 
      	 
      	 
      
	 
      	
                Official
      Number:

              	
                13198

              
	 
      	 
      	 
      
	 
      	
                Dwt:

              	
                72,
      891

              
	 
      	 
      	 
      
	 
      	
                Class
      Society and notation:

              	
                Det
      Norske Veritas +1A1

              
	 
      	 
      	
                Bulk
      Carrier ESP HC-E E0

              
	 
      	 
      	
                DK(+)
      HA(+) IB(+) HOLDDS (2,4)

              
	 
      	 
      	
                may
      be empty BIS

              
	 
      	
                Year
      built:

              	
                1995

              
	 
      	 
      	 
      
	 
      	
                Owner:

              	
                Opera
      Navigation Co.

              

      

      
        
           

        

        
          68

          
            

          

        

        
           

        

      

    

    

    SCHEDULE
3

     

    DRAWDOWN
NOTICE

     

    To:           Bayerische
Hypo-und Vereinsbank AG

    62, Notara Street

    Piraeus

    Greece

    

    Attention:
Loans
Administration                                                                                                           
[               ]
2007

    

    DRAWDOWN
NOTICE

    

    
      	
              1

            	
              We
      refer to the loan agreement (the “Loan Agreement”) dated
      [l] 2007 and
      made between ourselves as Borrower, the Lenders referred to therein
      yourselves as Agent, Arranger, Swap Bank and as Security Trustee in
      connection with a secured credit facility of up to
      US$100,000,000.  Terms defined in the Loan Agreement have their
      defined meanings when used in this Drawdown
  Notice.

            

    

     

    
      	
              2

            	
              We
      request to borrow [the Existing Ships Advance] [an Acquisition [l] Advance in
      relation to [l]] as
      follows:

            

    

     

    
      	
              (a)

            	
              Amount
      of Advance:
      $[         ];

            

    

     

    
      	
              (b)

            	
              Drawdown
      Date:  [             ];

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              (d)

            	
              Payment
      instructions : account of
      [                             ]
      and numbered
      [                                          ]
      with
      [                 ]
      of
      [                       ].

            

    

     

    
      	
              3

            	
              We
      represent and warrant that:

            

    

     

    
      	
              (a)

            	
              the
      representations and warranties in Clause 10 of the Loan Agreement would
      remain true and not misleading if repeated on the date of this notice with
      reference to the circumstances now
existing;

            

    

     

    
      	
              (b)

            	
              no
      Event of Default or Potential Event of Default has occurred or will result
      from the borrowing of the Loan.

            

    

     

    
      	
              4

            	
              This
      notice cannot be revoked without the prior consent of the Majority
      Lenders.

            

    

     

    
      	
              5

            	
              We
      will use the Advance for our benefit and under our full responsibility and
      exclusively for the purpose specified in the Loan
    Agreement.

            

    

     

    [Name
of Signatory]

    

    ________________________________

    

    for
and on behalf of

    PARAGON
SHIPPING INC.

    
      
         

      

      
        69

        
          

        

      

      
         

      

    

    SCHEDULE
4

     

    CONDITION
PRECEDENT DOCUMENTS

     

    

    PART
A

    

    The
following are the documents referred to in Clause 9.1(a).

    

    
      	
              1

            	
              A
      duly executed original of each of:

            

    

     

    
      	
              (a)

            	
              this
      Agreement;

            

    

     

    
      	
              (b)

            	
              the
      Agency and Trust Deed;

            

    

     

    
      	
              (c)

            	
              the
      Fee Letter;

            

    

     

    
      	
              (d)

            	
              the
      Master Agreement;

            

    

     

    
      	
              (e)

            	
              the
      Guarantees;

            

    

     

    
      	
              (f)

            	
              the
      Master Agreement Assignment;

            

    

     

    
      	
              (g)

            	
              the
      Existing Ship Earnings Accounts Pledges;
and

            

    

     

    
      	
              (h)

            	
              the
      Retention Account Pledge.

            

    

     

    
      	
              2

            	
              Copies
      of the certificate of incorporation and constitutional documents of the
      Borrower and each Owner.

            

    

     

    
      	
              3

            	
              Copies
      of resolutions of the shareholders and directors of the Borrower and of
      each Owner authorising the execution of each of the Finance Documents to
      which the Borrower and that Owner is a party and, in the case of the
      Borrower, authorising named officers to give the Drawdown Notices and
      other notices under this Agreement.

            

    

     

    
      	
              4

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

            

    

     

    
      	
              5

            	
              Copies
      of all consents which the Borrower and any Owner requires to enter into,
      or make any payment under, any Finance
Document.

            

    

     

    
      	
              6

            	
              The
      originals of any mandates or other documents required in connection with
      the opening or operation of each Existing Ship Earnings Account and the
      Retention Account.

            

    

     

    
      	
              7

            	
              Evidence
      satisfactory to the Agent that each Owner of an Existing Ship is a direct
      or indirect wholly-owned subsidiary of the
  Borrower.

            

    

     

    
      	
              8

            	
              All
      documentation required by each Creditor Party in relation to the Borrower
      and any Security Party pursuant to that Creditor Party’s “know your
      customer” requirements.

            

    

     

    
      	
              9

            	
              Documentary
      evidence that the Agent for service of process named in Clause 30 has
      accepted its appointment.

            

    

     

    
      
         

      

      
        70

        
          

        

      

      
         

      

    

    

     

    
      	
              10

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

            

    

     

    
      	
              11

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

            

    

     

    PART
B

     

    The
following are the documents referred to in Clause 9.1(b).

    

    
      	
              1

            	
              Evidence
      that an amount of not less than $1,500,000 is standing to the credit of
      the Earnings Accounts.

            

    

     

    
      	
              2

            	
              In
      relation to each Existing Ship, a duly executed original of the Mortgage,
      the Deed of Covenant (if applicable), the General Assignment, the Existing
      Ship Earnings Account Pledge and (if applicable) the Charterparty
      Assignment for that Existing Ship (and of each document to be delivered
      under each of them).

            

    

     

    
      	
              3

            	
              Documentary
      evidence that:

            

    

     

    
      	
              (a)

            	
              each
      Existing Ship is definitively and permanently registered in the name of
      its Owner under the applicable Approved
Flag;

            

    

     

    
      	
              (b)

            	
              each
      Existing Ship is in the absolute and unencumbered ownership of its Owner
      save as contemplated by the Finance Documents to which that Owner is a
      party;

            

    

     

    
      	
              (c)

            	
              each
      Existing Ship maintains the highest available class with such first-class
      classification society which is a member of IACS as the Agent may approve
      free of all overdue recommendations and conditions of such classification
      society;

            

    

     

    
      	
              (d)

            	
              each
      Mortgage relative to an Existing Ship has been duly registered against
      that Existing Ship as a valid first preferred or, as the case may be,
      priority statutory mortgage in accordance with the laws of applicable
      Approved Flag State; and

            

    

     

    
      	
              (e)

            	
              each
      Existing Ship is insured in accordance with the provisions of this
      Agreement and all requirements therein in respect of such insurances have
      been complied with.

            

    

     

    
      	
              4

            	
              A
      copy of the Management Agreement and a duly executed original of the
      Manager’s Undertaking in relation to each Existing
  Ship.

            

    

     

    
      	
              5

            	
              Copies
      of:

            

    

     

    
      	
              (a)

            	
              the
      document of compliance (DOC) and safety management  certificate
      (SMC) referred to in paragraph (a) of the definition of the ISM Code
      Documentation in respect of each Existing Ship and the applicable Approved
      Manager certified as true and in effect by the Owner of such Existing
      Ship; and

            

    

     

    
      	
              (b)

            	
              the
      ISPS Code Documentation in respect of each Existing Ship and the Owner
      thereof certified as true and in effect by that
  Owner.

            

    

     

    
      
         

      

      
        71

        
          

        

      

      
         

      

    

    

     

    
      	
              6

            	
              Two
      valuations (at the cost of the Borrower) of each Existing Ship addressed
      to the Agent, stated to be for the purpose of this Agreement and dated not
      earlier than 15 days before the Drawdown Date for the Existing Ships
      Advance, each from an Approved
Broker.

            

    

     

    
      	
              7

            	
              A
      compliance certificate (in the form set out in Schedule 6) demonstrating
      the compliance by the Borrower (or not, as the case may be) with the
      provisions of Clause 12.4 (such compliance to be determined by reference
      to the unaudited consolidated accounts of the Group for the financial
      quarter which ended on 30 [June] [September] 2007) signed by the chief
      financial officer of the Borrower.

            

    

     

    
      	
              8

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

            

    

     

    
      	
              9

            	
              A
      favourable opinion (at the cost of the Borrower) from an independent
      insurance consultant acceptable to the Agent on such matters relating to
      the insurances of the Existing Ships as the Agent may
    require.

            

    

     

    
      	
              10

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

            

    

     

    PART
C

    

    The
following are the documents referred to in Clause 9.1(c).

    

    “Relevant Ship” means, in
relation to an Acquisition Advance, the Ship which is to be part-financed by
that Advance.

    

    
      	
              1

            	
              A
      duly executed original of the Mortgage, the Deed of Covenant (if
      applicable), the General Assignment, the Target Ship Earnings Account
      Pledge and (if applicable) the Charterparty Assignment for the Relevant
      Ship (and of each document to be delivered under each of
      them).

            

    

     

    
      	
              2

            	
              Documentary
      evidence that:

            

    

     

    
      	
              (a)

            	
              the
      Relevant Ship has been unconditionally delivered to, and accepted by, the
      relevant Owner under the relevant MOA and the full purchase price payable
      under that MOA has been duly paid;

            

    

     

    
      	
              (b)

            	
              the
      Relevant Ship is definitively and permanently registered in the name of
      the relevant Owner under an Approved
Flag;

            

    

     

    
      	
              (c)

            	
              the
      Relevant Ship is in the absolute and unencumbered ownership of the
      relevant Owner save as contemplated by the Finance
    Documents;

            

    

     

    
      	
              (d)

            	
              the
      Relevant Ship maintains the highest available class with such first-class
      classification society which is a member of IACS as the Agent may approve
      free of all recommendations and conditions of such classification
      society;

            

    

     

    
      	
              (e)

            	
              the
      Mortgage relative to the Relevant Ship has been duly registered or
      recorded (as the case may be) against the Relevant Ship as a valid first
      priority or preferred ship mortgage in accordance with the laws of the
      relevant Approved Flag State; and

            

    

     

    
      
         

      

      
        72

        
          

        

      

      
         

      

    

    

     

    
      	
              (f)

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

            

    

     

    
      	
              3

            	
              A
      copy of the Management Agreement and a duly executed original of the
      Manager’s Undertaking in relation to the Relevant
  Ship.

            

    

     

    
      	
              4

            	
              Copies
      of:

            

    

     

    
      	
              (a)

            	
              the
      document of compliance (DOC) and safety management certificate (SMC)
      referred to in paragraph (a) of the definition of the ISM Code
      Documentation in respect of the Relevant Ship and the Approved Manager
      certified as true and in effect by the Owner of the Relevant Ship;
      and

            

    

     

    
      	
              (b)

            	
              the
      ISPS Code Documentation in respect of the Relevant Ship and the Owner
      thereof certified as true and in effect by the relevant
    Owner.

            

    

     

    
      	
              5

            	
              A
      survey report in respect of that Relevant Ship dated not later than 5 days
      prior to the relevant Drawdown
Date.

            

    

     

    
      	
              6

            	
              Two
      valuations of the Relevant Ship and of all other Ships subject to a
      Mortgage at the relevant Drawdown Date, addressed to the Agent, stated to
      be for the purpose of this Agreement and dated not earlier than 30 days
      before the relevant Drawdown Date, each prepared (at the expense of the
      Borrower) by an Approved Broker in accordance with Clause 15.4 which shows
      the value of the Relevant Ship and each other Ship in an amount acceptable
      to the Agent.

            

    

     

    
      	
              7

            	
              Evidence
      satisfactory to the Agent that the Owner of the Relevant Ship remains a
      direct or indirect wholly-owned subsidiary of the
  Borrower.

            

    

     

    
      	
              8

            	
              Documentary
      evidence that there is standing in the credit of the Earnings Accounts an
      amount not less than (a) $500,000 multiplied by (b) the number of Ships
      subject to a Mortgage at that time (including, without limitation, the
      Relevant Ship).

            

    

     

    
      	
              9

            	
              A
      favourable legal opinion from lawyers appointed by the Agent on such
      matters concerning the laws of the Approved Flag State where the Relevant
      Ship is registered and such other relevant jurisdictions as the Agent may
      require.

            

    

     

    
      	
              10

            	
              A
      favourable opinion (at the cost of the Borrower) from an independent
      insurance consultant acceptable to the Agent on such matters relating to
      the insurances for the Relevant Ship as the Agent may
    require.

            

    

     

    
      	
              11

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

            

    

     

    
      	
               
      

            	
              Every
      other copy document delivered under this Schedule shall be certified as a
      true and up to date copy by a director or the secretary (or equivalent
      officer) of the Borrower or any other person acceptable to the Agent in
      its sole discretion.

            

    

    
      
         

      

      
        73

        
          

        

      

      
         

      

    

    SCHEDULE
5

    

    TRANSFER
CERTIFICATE

    

    

    The
Transferor and the Transferee accept exclusive responsibility for ensuring that
this Certificate and the transaction to which it relates comply with all legal
and regulatory requirements applicable to them respectively.

    

    

    
      	
              To:

            	
              Bayerische
      Hypo-und Vereinsbank AG for itself and for and on behalf of the Borrower,
      each Security Party, the Security Trustee and each Lender, as defined in
      the Loan Agreement referred to
below.

            

    

    

    [                                  ]

    

    
      	
              1

            	
              This
      Certificate relates to a Loan Agreement (the “Loan Agreement”) dated
      [l]2007 and
      made between (1) Paragon Shipping Inc. as borrower (the “Borrower”), (2) the
      banks and financial institutions named therein as Lenders, (3) Bayerische
      Hypo-und Vereinsbank AG as Agent, (4) Bayerische Hypo-und Vereinsbank AG
      as Arranger, (5) Bayerische Hypo-und Vereinsbank AG as Security Trustee
      and (6) Bayerische Hypo-und Vereinsbank AG as Swap Bank in respect of a
      secured credit facility of up to
US$100,000,000.

            

    

     

    
      	
              2

            	
              In
      this Certificate:

            

    

     

    
      	
               
      

            	
              “the Relevant Parties”
      means the Agent, the Borrower, each Security Party, the Security Trustee,
      the Swap Bank and each Lender;

            

    

    

    
      	
               
      

            	
              “the Transferor” means
      [full name] of [lending office];

            

    

    

    
      	
               
      

            	
              “the Transferee” means
      [full name] of [lending office].

            

    

    

    
      	
               
      

            	
              Terms
      defined in the Loan Agreement shall, unless the contrary intention
      appears, have the same meanings when used in this
    Certificate.

            

    

    

    
      	
              3

            	
              The
      effective date of this Certificate is
      .........200    Provided that this
      Certificate shall not come into effect unless it is signed by the Agent on
      or before that date.

            

    

     

    
      	
              4

            	
              The
      Transferor assigns to the Transferee absolutely all rights and interests
      (present, future or contingent) which the Transferor has as Lender under
      or by virtue of the Loan Agreement and every other Finance Document in
      relation to [    ] per cent. of the Contribution
      outstanding to the Transferor (or its predecessors in title) which is set
      out below:

            

    

     

    
      	 	
              Contribution

            	
              Amount
      transferred

            
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      

    

    
      	
              5

            	
              By
      virtue of this Transfer Certificate and Clause 26 of the Loan Agreement,
      the Transferor is discharged [entirely from its Commitment which amounts
      to
      $[          ]]

            

    

     

    
      
         

      

      
        74

        
          

        

      

      
         

      

    

    [from
[    ] per cent. of its Commitment, which percentage
represents $[          ]] and
the Transferee acquires a Commitment of
$[              ].

     

    
      	
              6

            	
              The
      Transferee undertakes with the Transferor and each of the Relevant Parties
      that the Transferee will observe and perform all the obligations under the
      Finance Documents which Clause 26 of the Loan Agreement provides will
      become binding on it upon this Certificate taking
  effect.

            

    

     

    
      	
              7

            	
              The
      Agent, at the request of the Transferee (which request is hereby made)
      accepts, for the Agent itself and for and on behalf of every other
      Relevant Party, this Certificate as a Transfer Certificate taking effect
      in accordance with Clause 26 of the Loan
  Agreement.

            

    

     

    
      	
              8

            	
              The
      Transferor:

            

    

     

    
      	
              (a)

            	
              warrants
      to the Transferee and each Relevant
Party:

            

    

     

    
      	
               
      

            	
              (i)

            	
              that
      the Transferor has full capacity to enter into this transaction and has
      taken all corporate action and obtained all consents which are in
      connection with this transaction;
and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              that
      this Certificate is valid and binding as regards the
      Transferor;

            

    

     

    
      	
              (b)

            	
              warrants
      to the Transferee that the Transferor is absolutely entitled, free of
      encumbrances, to all the rights and interests covered by the assignment in
      paragraph 4 above;

            

    

     

    
      	
              (c)

            	
              undertakes
      with the Transferee that the Transferor will, at its own expense, execute
      any documents which the Transferee reasonably requests for perfecting in
      any relevant jurisdiction the Transferee's title under this Certificate or
      for a similar purpose.

            

    

     

    9           The
Transferee:

     

    
      	
              (a)

            	
              confirms
      that it has received a copy of the Loan Agreement and each other Finance
      Document;

            

    

     

    
      	
              (b)

            	
              agrees
      that it will have no rights of recourse on any ground against either the
      Transferor, the Agent, the Security Trustee, the Swap Bank or any Lender
      in the event that:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      Finance Documents prove to be invalid or
  ineffective,

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      Borrower or any Security Party fails to observe or perform its
      obligations, or to discharge its liabilities, under the Finance
      Documents;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              it
      proves impossible to realise any asset covered by a Security Interest
      created by a Finance Document, or the proceeds of such assets are
      insufficient to discharge the liabilities of the Borrower or any Security
      Party under the Finance Documents;

            

    

     

    
      	
              (c)

            	
              agrees
      that it will have no rights of recourse on any ground against the Agent,
      the Security Trustee, the Swap Bank or any Lender in the event that this
      Certificate proves to be invalid or
ineffective;

            

    

     

    
      
         

      

      
        75

        
          

        

      

      
         

      

    

    

     

    
      	
              (d)

            	
              warrants
      to the Transferor and each Relevant Party (i) that it has full capacity to
      enter into this transaction and has taken all corporate action and
      obtained all official consents which it needs to take or obtain in
      connection with this transaction; and (ii) that this Certificate is valid
      and binding as regards the Transferee;
and

            

    

     

    
      	
              (e)

            	
              confirms
      the accuracy of the administrative details set out below regarding the
      Transferee.

            

    

     

    
      	
              10

            	
              The
      Transferor and the Transferee each undertake with the Agent and the
      Security Trustee severally, on demand, fully to indemnify the Agent and/or
      the Security Trustee in respect of any claim, proceeding, liability or
      expense (including all legal expenses) which they or either of them may
      incur in connection with this Certificate or any matter arising out of it,
      except such as are shown to have been mainly and directly caused by the
      gross and culpable negligence or dishonesty of the Agent's or the Security
      Trustee's own officers or
employees.

            

    

     

    
      	
              11

            	
              The
      Transferee shall repay to the Transferor on demand so much of any sum paid
      by the Transferor under paragraph 10 above as exceeds one-half of the
      amount demanded by the Agent or the Security Trustee in respect of a
      claim, proceeding, liability or expense which was not reasonably
      foreseeable at the date of this Certificate; but nothing in this paragraph
      shall affect the liability of each of the Transferor and the Transferee to
      the Agent or the Security Trustee for the full amount demanded by
      it.

            

    

     

    

    
      	
              [Name
      of Transferor]

               

               

              By: 

               

              Date: 

            	
              [Name
      of Transferee]

               

               

              By:

               

              Date:

            

    

                                                                                

    Agent

    

    Signed
for itself and for and on behalf of itself

    as
Agent and for every other Relevant Party

    

    BAYERISCHE
HYPO-UND VEREINSBANK AG

    

    By:

    

    Date:

    

    
      
         

      

      
        76

        
          

        

      

      
         

      

    

    

    Administrative
Details of Transferee

    

    

    Name
of Transferee:

    

    Lending
Office:

    

    Contact
Person

    (Loan
Administration Department):

    

    Telephone:

    

    Telex:

    

    Fax:

    

    Contact
Person

    (Credit
Administration Department):

    

    Telephone:

    

    Telex:

    

    Fax:

    

    Account
for payments:

    

    

    

    

    
      	
              Note:

            	
              This
      Transfer Certificate alone may not be sufficient to transfer a
      proportionate share of the Transferor's interest in the security
      constituted by the Finance Documents in the Transferor's or Transferee's
      jurisdiction.  It is the responsibility of each Lender to
      ascertain whether any other documents are required for this
      purpose.

            

    

    
      
         

      

      
        77

        
          

        

      

      
         

      

    

    

    SCHEDULE
6

     

    FORM
OF COMPLIANCE CERTIFICATE

     

    To:         Bayerische
Hypo-und Vereinsbank AG

     62, Notara Street

     Piraeus

    Greece

    

    [l] 200[l]

    

    Dear
Sirs,

    

    We
refer to a loan agreement dated [l] 2007 (the “Loan Agreement”) made between
(amongst others) yourselves and ourselves in relation to a secured credit
facility of up to $100,000,000.

    

    Words
and expressions defined in the Loan Agreement shall have the same meaning when
used in this compliance certificate.

    

    We
enclose with this certificate a copy of the [audited]/[unaudited] consolidated
accounts for the Group for the [Financial Year] [3-month period] ended [l].  The
accounts (i) have been prepared in accordance with all applicable laws and GAAP
all consistently applied, (ii) give a true and fair view of the state of affairs
of the Group at the date of the accounts and of its profit for the period to
which the accounts relate and (iii) fully disclose or provide for all
significant liabilities of the Group.

    

    We
also enclose copies of the valuations of all the Fleet Vessels which were used
in calculating the Market Value Adjusted Total Assets of the Group as at [l].

    

    The
Borrower represents that no Event of Default or Potential Event of Default has
occurred as at the date of this certificate [except for the following matter or
event [set out all material
details of matter or event]].  In addition as of [l], the Borrower confirms
compliance with the financial covenants set out in Clause 12.4 of the Loan
Agreement for the 3 months ending as of the date to which the enclosed accounts
are prepared.

    

    We
now certify that, as at [l]:

    

    
      	
              (a)

            	
              the
      ratio of Total Liabilities to EBITDA is [l]:[l];

            

    

     

    
      	
              (b)

            	
              the
      Market Value Adjusted Net Worth of the Group is $[l];

            

    

     

    
      	
              (c)

            	
              Liquid
      Assets available to the Group are $[l] in aggregate of
      which an aggregate amount of $[l] is standing to
      the credit of the Earnings
Accounts;

            

    

     

    
      	
              (d)

            	
              the
      Leverage Ratio is [l]:[l];
    and

            

    

     

    
      	
              (e)

            	
              the
      Security Cover Percentage is [l] per
      cent.

            

    

     

    This
certificate shall be governed by, and construed in accordance with, English
law.

    

    

    ______________________________

    [l]

    Chief
Financial Officer of

    Paragon
Shipping Inc.

    
      
         

      

      
        78

        
          

        

      

      
         

      

    

    SCHEDULE
7

     

    MANDATORY
COST FORMULA

     

    
      	
              1

            	
              The
      Mandatory Cost is an addition to the interest rate to compensate Lenders
      for the cost of compliance with (a) the requirements of the Financial
      Services Authority (or any other authority which replaces all or any of
      its functions) or (b) the requirements of the European Central
      Bank.

            

    

     

    
      	
              2

            	
              On
      the first day of each Interest Period (or as soon as possible thereafter)
      the Agent shall calculate, as a percentage rate, a rate (the "Additional Cost Rate")
      for each Lender, in accordance with the paragraphs set out
      below.  The Mandatory Cost will be calculated by the Agent as a
      weighted average of the Lenders' Additional Cost Rates (weighted in
      proportion to the percentage participation of each Lender in the Loan) and
      will be expressed as a percentage rate per
  annum.

            

    

     

    
      	
              3

            	
              The
      Additional Cost Rate for any Lender lending from a lending office in a
      Participating Member State will be the percentage notified by that Lender
      to the Agent.  This percentage will be certified by that Lender
      in its notice to the Agent to be its reasonable determination of the cost
      (expressed as a percentage of that Lender’s participation in the Loan) of
      complying with the minimum reserve requirements of the European Central
      Bank in respect of loans made from that lending
  office.

            

    

     

    
      	
              4

            	
              The
      Additional Cost Rate for any Lender lending from a lending office in the
      United Kingdom will be calculated by the Agent as
  follows:

            

    

     

    
      	 
      	 
      	
              E x
0.01

            	 
      	
              per
      cent. per annum

            	 
      
	 
      	 
      	
              300

            	 
      	 
      

    

    

    Where:

     

    
      	
               
      

            	
              E

            	
              is
      designed to compensate Lenders for amounts payable under the Fees Rules
      and is calculated by the Agent as being the average of the most recent
      rates of charge supplied by the Lenders to the Agent pursuant to paragraph
      6 below and expressed in pounds per
£1,000,000.

            

    

     

    
      	
              5

            	
              For
      the purposes of this Schedule:

            

    

     

    
      	
              (a)

            	
              “Special Deposits” has
      the meaning given to it from time to time under or pursuant to the Bank of
      England Act 1998 or (as may be appropriate) by the Bank of
      England;

            

    

     

    
      	
              (b)

            	
              “Fees Rules” means the
      rules on periodic fees contained in the FSA Supervision Manual or such
      other law or regulation as may be in force from time to time in respect of
      the payment of fees for the acceptance of
  deposits;

            

    

     

    
      	
              (f)

            	
              “Fee Tariffs” means the
      fee tariffs specified in the Fees Rules under the activity group A.1
      Deposit acceptors (ignoring any minimum fee or zero rated fee required
      pursuant to the Fees Rules but taking into account any applicable discount
      rate);

            

    

     

    
      	
              (g)

            	
              “Participating Member
      State” means any member state of the European Union that adopts or
      has adopted the euro as its lawful currency in accordance with legislation
      of the European Union relating to European Monetary Union;
    and

            

    

     

    
      
         

      

      
        79

        
          

        

      

      
         

      

    

    

     

    
      	
              (h)

            	
              “Tariff Base” has the
      meaning given to it in, and will be calculated in accordance with, the
      Fees Rules.

            

    

     

    
      	
              6

            	
              If
      requested by the Agent, each Lender lending from a lending office in the
      United Kingdom shall, as soon as practicable after publication by the
      Financial Services Authority, supply to the Agent, the rate of charge
      payable by that Lender to the Financial Services Authority pursuant to the
      Fees Rules in respect of the relevant financial year of the Financial
      Services Authority (calculated for this purpose by that Lender as being
      the average of the Fee Tariffs applicable to that Lender for that
      financial year) and expressed in pounds per £1,000,000 of the Tariff Base
      of that Lender.

            

    

     

    
      	
              7

            	
              Each
      Lender shall supply any information required by the Agent for the purpose
      of calculating its Additional Cost Rate.  In particular, but
      without limitation, each Lender shall supply the following information in
      writing on or prior to the date on which it becomes a
    Lender:

            

    

     

    
      	
              (a)

            	
              the
      jurisdiction of its lending office;
and

            

    

     

    
      	
              (b)

            	
              any
      other information that the Agent may reasonably require for such
      purpose.

            

    

     

    Each
Lender shall promptly notify the Agent in writing of any change to the
information provided by it pursuant to this paragraph.

    

    
      	
              8

            	
              The
      rates of charge of each Lender lending from a lending office in the United
      Kingdom for the purpose of calculating E shall be determined by the Agent
      based upon the information supplied to it pursuant to paragraph 6 above
      and on the assumption that, unless a Lender notifies the Agent to the
      contrary, each Lender's obligations in relation to cash ratio deposits and
      Special Deposits are the same as those of a typical bank from its
      jurisdiction of incorporation with a lending office in the same
      jurisdiction as its lending office.

            

    

     

    
      	
              9

            	
              The
      Agent shall have no liability to any person if such determination results
      in an Additional Cost Rate which over or under compensates any Lender and
      shall be entitled to assume that the information provided by any Lender
      pursuant to paragraphs 3, 6 and 7 above is true and correct in all
      respects.

            

    

     

    
      	
              10

            	
              The
      Agent shall distribute the additional amounts received as a result of the
      Mandatory Cost to the Lenders on the basis of the Additional Cost Rate for
      each Lender based on the information provided by each Lender pursuant to
      paragraphs 3, 6 and 7 above.

            

    

     

    
      	
              11

            	
              Any
      determination by the Agent pursuant to this Schedule in relation to a
      formula, the Mandatory Cost, an Additional Cost Rate or any amount payable
      to a Lender shall, in the absence of manifest error, be conclusive and
      binding on all parties.

            

    

     

    The
Agent may from time to time, after consultation with the Borrower and the
Lenders, determine and notify to all parties any amendments which are required
to be made to this Schedule in order to comply with  any change in
law, regulation or any requirements from time to time imposed by the Financial
Services Authority or the European Central Bank (or, in any case, any other
authority which replaces all or any of its functions) and any such determination
shall, in the absence of manifest error, be conclusive and binding on all
parties

    
      
         

      

      
        80

        
          

        

      

      
         

      

    

     

    SCHEDULE
8

     

    DESIGNATION
NOTICE

     

    

    

    

    To:         Bayerische
Hypo-und Vereinsbank AG

     62, Notara Street 

     Piraeus

    Greece

    

    

     [l]

    

    Dear
Sirs

    

    Loan
Agreement dated [l]
2007 made between (inter alia) (i) ourselves as Borrower, (ii) the Lenders,
(iii) yourselves as Agent, Arranger and Security Trustee and (iv) yourselves as
Swap Bank (the “Loan Agreement”)

    

    We
refer to:

    

    
      	
              1

            	
              the
      Loan Agreement;

            

    

     

    
      	
              2

            	
              the
      Master Agreement dated [l] made between
      ourselves and [l];
    and

            

    

     

    
      	
              3

            	
              a
      Confirmation delivered pursuant to the said Master Agreement dated [l] and addressed by
      [l] to
      us.

            

    

     

    In
accordance with the terms of the Loan Agreement, we hereby give you notice of
the said Confirmation and hereby confirm that the Transaction evidenced by it
will be designated as a “Designated Transaction” for the purposes of the Loan
Agreement and the Finance Documents.

    

    Yours
faithfully,

    

    

    

    

    

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

    for
and on behalf of

    PARAGON
SHIPPING INC.  

    
      
         

      

      
        81

        
          

        

      

      
         

      

    

    EXECUTION
PAGES

     

    

    
      	
              BORROWER

            	 
      	 
      
	 
      	 
      	 
      
	
              SIGNED
by

            	
              )

            	 
      
	
              for
      and on behalf of

            	
              )

            	 
      
	
              PARAGON
      SHIPPING INC.

            	
              )

            	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              LENDERS

            	 
      	 
      
	 
      	 
      	 
      
	
              SIGNED
by

            	
              )

            	 
      
	
              for
      and on behalf of

            	
              )

            	 
      
	
              BAYERISCHE
      HYPO-UND

            	
              )

            	 
      
	
              VEREINSBANK
      AG

            	
              )

            	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              SWAP
      BANK

            	 
      	 
      
	 
      	 
      	 
      
	
              SIGNED
by

            	
              )

            	 
      
	
              for
      and on behalf of

            	
              )

            	 
      
	
              BAYERISCHE
      HYPO-UND

            	
              )

            	 
      
	
              VEREINSBANK
      AG

            	
              )

            	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              AGENT

            	 
      	 
      
	 
      	 
      	 
      
	
              SIGNED
by

            	
              )

            	 
      
	
              for
      and on behalf of

            	
              )

            	 
      
	
              BAYERISCHE
      HYPO-UND

            	
              )

            	 
      
	
              VEREINSBANK
      AG

            	
              )

            	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              SECURITY
      TRUSTEE

            	 
      	 
      
	 
      	 
      	 
      
	
              SIGNED
by

            	
              )

            	 
      
	
              for
      and on behalf of

            	
              )

            	 
      
	
              BAYERISCHE
      HYPO-UND

            	
              )

            	 
      
	
              VEREINSBANK
      AG

            	
              )

            	 
      

    

    

    
      
         

      

      
        82

        
          

        

      

      
         

      

    

    

    
      	
              ARRANGER

            	 
      	 
      
	 
      	 
      	 
      
	
              SIGNED
by

            	
              )

            	 
      
	
              for
      and on behalf of

            	
              )

            	 
      
	
              BAYERISCHE
      HYPO-UND

            	
              )

            	 
      
	
              VEREINSBANK
      AG

            	
              )

            	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              Witness
      to all the

            	
              )

            	 
      
	
              above
      signatures

            	
              )

            	 
      
	 
      	 
      	 
      
	
              Name:

            	 
      	 
      
	 
      	 
      	 
      
	
              Address:

            	 
      	 
      

    

    

    

    

    

    

    SK 25744 0001
876099

    
      
         

      

      
        83d876102_ex4-11.htm

    

    

    EXHIBIT
4.11

    

    

    

    

    Date     December
2007

    

    PARAGON
SHIPPING INC.

    as
Borrower

    

    -
and -

    

    THE
BANKS AND FINANCIAL INSTITUTIONS

    listed
in Schedule 1

    as
Lenders

    

    -
and -

    

    BANK
OF SCOTLAND PLC.

    as
Agent, Mandated Lead Arranger, Underwriter and as Security Trustee

    

    

    -
and -

    

    BANK
OF SCOTLAND PLC.

    as
Swap Bank

    

    __________________________________

    

    LOAN
AGREEMENT

    __________________________________

    

    relating
to a secured revolving credit facility of

    up
to US$89,000,000

    

    

    
      
        
          WATSON
FARLEY & WILLIAMS

          Piraeus

        

         

      

      
         

        
          

        

      

      
         

      

    

    INDEX

    

    
      	
              Clause

            	 
      	
              Page

            
	 
      	 
      	 
      
	
              1

            	
              INTERPRETATION

            	
              1

            
	
              2

            	
              FACILITY

            	
              17

            
	
              3

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

            	
              18

            
	
              4

            	
              DRAWDOWN

            	
              19

            
	
              5

            	
              INTEREST

            	
              20

            
	
              6

            	
              INTEREST
      PERIODS

            	
              22

            
	
              7

            	
              DEFAULT
      INTEREST

            	
              22

            
	
              8

            	
              REPAYMENT
      REDUCTION, REPAYMENT AND PREPAYMENT

            	
              23

            
	
              9

            	
              CONDITIONS
      PRECEDENT

            	
              26

            
	
              10

            	
              REPRESENTATIONS
      AND WARRANTIES

            	
              27

            
	
              11

            	
              GENERAL
      UNDERTAKINGS

            	
              29

            
	
              12

            	
              CORPORATE
      UNDERTAKINGS

            	
              32

            
	
              13

            	
              INSURANCE

            	
              34

            
	
              14

            	
              SHIP
      COVENANTS

            	
              39

            
	
              15

            	
              SECURITY
      COVER

            	
              43

            
	
              16

            	
              PAYMENTS
      AND CALCULATIONS

            	
              44

            
	
              17

            	
              APPLICATION
      OF RECEIPTS

            	
              46

            
	
              18

            	
              APPLICATION
      OF EARNINGS

            	
              47

            
	
              19

            	
              EVENTS
      OF DEFAULT

            	
              48

            
	
              20

            	
              FEES
      AND EXPENSES

            	
              52

            
	
              21

            	
              INDEMNITIES

            	
              53

            
	
              22

            	
              NO
      SET-OFF OR TAX DEDUCTION

            	
              55

            
	
              23

            	
              ILLEGALITY,
      ETC

            	
              56

            
	
              24

            	
              INCREASED
      COSTS

            	
              57

            
	
              25

            	
              SET
      OFF

            	
              58

            
	
              26

            	
              TRANSFERS
      AND CHANGES IN LENDING OFFICES

            	
              58

            
	
              27

            	
              VARIATIONS
      AND WAIVERS

            	
              61

            
	
              28

            	
              NOTICES

            	
              62

            
	
              29

            	
              SUPPLEMENTAL

            	
              64

            
	
              30

            	
              LAW
      AND JURISDICTION

            	
              65

            
	
              SCHEDULE
      1  LENDERS AND COMMITMENTS

            	
              66

            
	
              SCHEDULE
      2  DETAILS OF INITIAL SHIPS AND OWNERS

            	
              67

            
	
              SCHEDULE
      3  DRAWDOWN NOTICE

            	
              68

            
	
              SCHEDULE
      4  CONDITION PRECEDENT DOCUMENTS

            	
              69

            
	
              SCHEDULE
      6  FORM OF COMPLIANCE CERTIFICATE

            	
              77

            
	
              SCHEDULE
      7  MANDATORY COST FORMULA

            	
              78

            
	
              SCHEDULE
      8  DESIGNATION NOTICE

            	
              80

            
	
              SCHEDULE
      9  REDUCTION OF LOAN

            	
              81

            
	
              EXECUTION
      PAGES

            	
              82

            

    

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    THIS LOAN AGREEMENT is made
on         December
2007

    

    BETWEEN:

     

    
      	
              (1)

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

            

    

     

    
      	
              (2)

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

            

    

     

    
      	
              (3)

            	
              BANK OF SCOTLAND PLC
      acting through its office at Pentland House, 8 Lochside Avenue,
      Edinburgh, EH12 9DJ, Scotland, as Agent;

            

    

     

    
      	
              (4)

            	
              BANK OF SCOTLAND PLC
      acting through its office at Pentland House, 8 Lochside Avenue,
      Edinburgh, EH12 9DJ, Scotland, as Mandated Lead
      Arranger;

            

    

     

    
      	
              (5)

            	
              BANK OF SCOTLAND PLC
      acting through its office at Pentland House, 8 Lochside Avenue,
      Edinburgh, EH12 9DJ, Scotland, as Security Trustee;

            

    

     

    
      	
              (6)

            	
              BANK OF SCOTLAND PLC
      acting through its office at Pentland House, 8 Lochside Avenue,
      Edinburgh, EH12 9DJ, Scotland as Underwriter;

            

    

     

    
      	
              (7)

            	
              BANK OF SCOTLAND PLC
      acting through its office at 33 Old Broad Street, London EC2N 1HZ
      as Swap
      Bank.

            

    

     

    WHEREAS

     

    
      	
              (A)

            	
              The
      Lenders have agreed to make available to the Borrower a secured revolving
      credit facility in an amount of up to US$89,000,000 to initially
      part-finance or refinance the purchase price of the Initial Ships.

            

    

     

    
      	
              (B)

            	
              To
      the extent initially borrowed for the purposes listed in Recital (A) above
      and prepaid, the Borrower shall be entitled to reborrow the prepaid
      amounts in order to part-finance the purchase price of any Future
      Ships.

            

    

     

    
      	
              (C)

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

            

    

     

    
      	
              (D)

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

            

    

     

    IT IS AGREED as
follows:

     

    
      	
              1

            	
              INTERPRETATION

            

    

     

    
      	
              1.1

            	
              Definitions.  Subject
      to Clause 1.5, in this Agreement:

            

    

     

    “Advances” means the Initial
Ships Advance and each Future Ship Advance and in the singular means any of
them;

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

            	
              “Agent” means Bank of
      Scotland Plc. and any of its successors including, without limitation, any
      successor appointed under clause 5 of the Agency and Trust
      Deed;

            

    

     

    
      	
               
      

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

            

    

     

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

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

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

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              (a)

            	
              (i)
      in the case of the Initial Ships Advance, 31 December 2007 and (ii) in the
      case of each Future Ship Advance, the date falling 1 month prior to the
      Final Maturity Date or (in the case of any Advance) such later date as the
      Agent may, with the authorisation of all the Lenders, agree with the
      Borrower; or

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

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

     

    
      	
               
      

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

            

    

     

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

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

     

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

     

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

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

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

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

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

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

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

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              (a)

            	
              all
      freight, hire and passage moneys, compensation payable to the relevant
      Owner or the Security Trustee in the event of requisition of that Ship for
      hire, remuneration for salvage and towage services, demurrage and
      detention moneys and damages for breach (or payments for variation or
      termination) of any charterparty or other contract for the employment of
      the Ship;

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

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

     

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

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Net
      Interest Expenses; and

            

    

     

    
      	
               
      

            	
              (iii)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

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

     

    
      	
               
      

            	
              “Environmental Claim”
      means:

            

    

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

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

            

    

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              (a)

            	
              any
      release of Environmentally Sensitive Material from that Ship;
      or

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

     “Final Maturity Date” means the
earlier of (i) the date falling on the fifth anniversary of the date on which
the second Initial Ship is delivered to the Owner thereof and (ii) 31 December
2012;

     

    
      	
               
      

            	
              “Finance Documents”
      means:

            

    

     

    
      	
               
      

            	
              (a)

            	
              this
      Agreement;

            

    

     

    
      	
               
      

            	
              (b)

            	
              the
      Master Agreement;

            

    

     

    
      	
               
      

            	
              (c)

            	
              the
      Fee Letter;

            

    

     

    
      	
               
      

            	
              (d)

            	
              the
      Agency and Trust Deed;

            

    

     

    
      	
               
      

            	
              (e)

            	
              the
      Guarantees;

            

    

     

    
      	
               
      

            	
              (f)

            	
              the
      Master Agreement Assignment;

            

    

     

    
      	
               
      

            	
              (g)

            	
              the
      Mortgages;

            

    

     

    
      	
               
      

            	
              (h)

            	
              the
      General Assignments;

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      Deeds of Covenant;

            

    

     

    
      	
               
      

            	
              (j)

            	
              the
      Initial Ships Earnings Accounts
Charge;

            

    

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

            	
              (k)

            	
              the
      Future Ship Earnings Accounts
Charges;

            

    

     

    
      	
               
      

            	
              (l)

            	
              the
      Retention Account Charge;

            

    

     

    
      	
               
      

            	
              (m)

            	
              any
      Charterparty Assignment;

            

    

     

    
      	
               
      

            	
              (n)

            	
              the
      Manager’s Undertakings; and

            

    

     

    
      	
               
      

            	
              (o)

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

    
      	
               
      

            	
              (d)

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

            

    

     

    
      	
               
      

            	
              (e)

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

            

    

     

    
      	
               
      

            	
              (f)

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

            

    

     

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

     

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

     

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

     

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

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

            	
              on
      the date of delivery of such Ship to its Owner, it is no more than 5 years
      old;

            

    

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

            	
              (c)

            	
              it
      has passed its special survey; and

            

    

     

    
      	
               
      

            	
              (d)

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

            

    

     

    and
in the plural, means all of them;

    

    
      	
               
      

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

            

    

     

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

     

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

     

    
      	
               
      

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

            

    

     

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

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              “IACS” means the
      International Association of Classification
  Societies;

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              “Initial
      Charterparty”  means, in respect
  of:

            

    

     

    
      	
               
      

            	
              (a)

            	
              “GOLDEN
      SEAS”, a time charterparty with Bunge SA for a period ending in December
      2008 at a daily hire rate of $64,000;
and

            

    

     

    
      	
               
      

            	
              (b)

            	
              “CORAL
      SEAS”, a time charterparty with Bunge SA for a period ending in January
      2010 at a daily hire rate of
$54,000,

            

    

     

    and,
in the plural, means both of them;

    

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    

     

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

     

    
      	
               
      

            	
              “Initial Ships Earnings Account
      Charge” means a deed creating security in favour of the Security
      Trustee over the Initial Ship Earnings Accounts, in such form as the
      Lenders may approve or require;

            

    

     

    
      	
               
      

            	
              “Insurances”  means,
      in relation to each Ship:

            

    

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    “Interest
Expenses”  means, in respect of the relevant period, the
aggregate of all interest payable by any member of the Group on any Financial
Indebtedness (excluding any amounts owing by one member of the Group to another
member of the Group) and any net amounts payable under interest rate hedge
agreements

     

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

     

    “ISM Code” means:

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

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

     

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

     

    
      	
               
      

            	
              “ISPS Code Documentation”
      includes:

            

    

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              “Lender” means, subject
      to Clause 26.6:

            

    

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

            	
              the
      holder for the time being of a Transfer
  Certificate;

            

    

     

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

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              “LIBOR” means, for an
      Interest Period:

            

    

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

            	
              if
      no rate is quoted on REUTERS BBA Page LIBOR 01, the rate per annum
      determined by the Agent to be the arithmetic mean of the rates per annum
      notified to the Agent by each Lender to be the rate per annum at which
      deposits in Dollars are offered to that Lender by leading banks in the
      London Interbank Market at or

            

    

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              about
      11.00 a.m. (London time) on the second Business Day prior to the
      commencement of that Interest Period for a period equal to that Interest
      Period and for delivery on the first Business Day of
  it;

            

    

     

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

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

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

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    “Majority Lenders”
means:

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

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

     

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

     

    “Mandated Lead Arranger” means
Bank of Scotland Plc. acting through its office at Pentland House, 8 Lochside
Avenue, Edinburgh, EH12 9DJ, Scotland,

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    

     

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

     

    “Margin” means:

     

    
      	
               
      

            	
              (c)

            	
              at
      any time when the Leverage Ratio is above 55 per cent. per annum, 1.30 per
      cent. per annum; and

            

    

     

    
      	
               
      

            	
              (d)

            	
              at
      all other times, 1.15 per cent. per
annum;

            

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      	
               
      

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

            

    

     

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

     

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

     

    “Owner” means:

     

    
      	
               
      

            	
              (a)

            	
              in
      relation to each Initial Ship, a corporation incorporated in the Republic
      of the Marshall Islands having its registered office at Trust Company
      Complex, Ajeltake Road, Ajeltake Island, Majuro, The Marshall Islands MH
      96960; and

            

    

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

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

    

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

     

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

     

    
      	
               
      

            	
              “Permitted Security
      Interests” means:

            

    

     

    
      	
               
      

            	
              (a)

            	
              Security
      Interests created by the Finance
Documents;

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

            	
              liens
      for salvage;

            

    

     

    
      	
               
      

            	
              (d)

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

            

    

     

    
      	
               
      

            	
              (e)

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

            

    

     

    
      	
               
      

            	
              (f)

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

            

    

     

    
      	
               
      

            	
              (g)

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              (a)

            	
              England
      and Wales;

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

    
      	
               
      

            	
              (d)

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

            

    

     

    
      	
               
      

            	
              (e)

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

            

    

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

            	
              (f)

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              “Reduction
      Date”  means each of the dates referred to in the first
      column of Schedule 9 on which the Total Commitments are to be
      reduced;

            

    

     

    
      	
               
      

            	
              “Reduction Start
      Date”  means the date falling on the earlier of (a) the
      date on which “GOLDEN SEAS” is delivered to its Owner and (b) 31 December
      2007;

            

    

     

    
      	
               
      

            	
              “Relevant
      Fraction”  means, for the purposes of Clauses 8.3 and
      8.4, a fraction whose numerator is the Market Value of the Ship which has
      been sold or become a Total Loss immediately prior to such sale or Total
      Loss and whose denominator is the aggregate Market Value immediately prior
      to such sale or Total Loss of all the Ships then subject to a
      Mortgage;

            

    

     

    
      	
               
      

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

            

    

     

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

     

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

     

    “Retention Account Charge”
means a deed creating security in favour of the Security Trustee in respect of
the Retention Account in such form as the Lenders may approve or
require;

     

    “Secured Liabilities” means all
liabilities which the Borrower, the Security Parties or any of them have, at the
date of this Agreement or at any later time or times, under or by virtue of the
Finance Documents or any judgment relating to the Finance Documents; and for
this purpose, there shall be disregarded any total or partial discharge of these
liabilities, or variation of their terms, which is effected by, or in connection
with, any bankruptcy, liquidation, arrangement or other procedure under the
insolvency laws of any country;

     

    
      	
               
      

            	
              “Security Cover
      Percentage” means, at any relevant time, the aggregate of the
      Market Value of all the Ships subject to a Mortgage expressed as a
      percentage of the Loan;

            

    

     

    “Security Interest”
means:

     

    
      	
               
      

            	
              (a)

            	
              a
      mortgage, charge (whether fixed or floating) or pledge, any maritime or
      other lien or any other security interest of any
  kind;

            

    

     

    
      	
               
      

            	
              (b)

            	
              the
      rights of the plaintiff under an action in rem in which the
      vessel concerned has been arrested or a writ has been issued or similar
      step taken; and

            

    

     

    
      	
               
      

            	
              (c)

            	
              any
      arrangement entered into by a person (A) the effect of which is to place
      another person (B) in a position which is similar, in economic terms, to
      the position in which B would have been had he held a security interest
      over an asset

            

    

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    of
A; but (c) does not apply to a right of set off or combination of accounts
conferred by the standard terms of business of a bank or financial
institution;

     

    
      	
               
      

            	
              “Security Party” means
      each Owner, the Approved Manager and any other person (except a Creditor
      Party) who, as a surety or mortgagor, as a party to any subordination or
      priorities arrangement, or in any similar capacity, executes a document
      falling within the final paragraph of the definition of “Finance
      Documents”;

            

    

     

    
      	
               
      

            	
              “Security Period” means
      the period commencing on the date of this Agreement and ending on the date
      on which the Agent notifies the Borrower, the Security Parties and the
      Lenders that:

            

    

     

    
      	
               
      

            	
              (a)

            	
              all
      amounts which have become due for payment by the Borrower or any Security
      Party under the Finance Documents have been
  paid;

            

    

     

    
      	
               
      

            	
              (b)

            	
              no
      amount is owing or has accrued (without yet having become due for payment)
      under any Finance Document;

            

    

     

    
      	
               
      

            	
              (c)

            	
              neither
      the Borrower nor any Security Party has any future or contingent liability
      under Clause 20, 21 or 22 below or any other provision of this Agreement
      or another Finance Document; and

            

    

     

    
      	
               
      

            	
              (d)

            	
              the
      Agent, the Security Trustee and the Majority Lenders do not consider that
      there is a significant risk that any payment or transaction under a
      Finance Document would be set aside, or would have to be reversed or
      adjusted, in any present or possible future bankruptcy of the Borrower or
      a Security Party or in any present or possible future proceeding relating
      to a Finance Document or any asset covered (or previously covered) by a
      Security Interest created by a Finance
Document;

            

    

     

    
      	
               
      

            	
              “Security Trustee” means
      Bank of Scotland Plc. and any of its successors including, without
      limitation, any successor appointed under clause 5 of the Agency and Trust
      Deed;

            

    

     

    “Seller” means, in relation to
an Initial Ship or a Future Ship, the company which is a party to the MOA for
that Ship in its capacity as the seller of the Ship;

    

    
      	
               
      

            	
              “Swap Bank” means Bank of
      Scotland Plc. acting through its office at 33 Old Broad Street, London
      EC2N 1HZ;

            

    

     

    “Swap Exposure” means, as at
any relevant date, the amount certified by the Swap Bank to the Agent to be the
aggregate net amount in Dollars which would be payable by the Borrower to the
Swap Bank under (and calculated in accordance with) section 6(e) (Payments on
Early Termination) of the Master Agreement if an Early Termination Date had
occurred on the relevant date in relation to all continuing Designated
Transactions entered into between the Borrower and the Swap Bank;

     

    “Ships” means, together, the
Initial Ships and the Future Ships which may be subject to a Mortgage at any
time and, in the singular, means any of them;

     

     “Total Assets” means, as at the
relevant date, the aggregate value of all current assets, fixed assets, and
other assets and restricted cash of the Group (valued in accordance with GAAP),
but excluding any assets held on trust;

     

    “Total
Equity”  means, as at the relevant date, the value of the
stockholders’ equity of the Group determined on a consolidated basis in
accordance with GAAP and as shown in the consolidated balance sheets for the
Group in the Applicable Accounts;

     

    “Total Liabilities” means, as
at the date of calculation, the aggregate Financial Indebtedness of the
Group;

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

            	
              “Total Loss” means, in
      relation to each Ship:

            

    

     

    
      	
               
      

            	
              (a)

            	
              actual,
      constructive, compromised, agreed or arranged total loss of that
      Ship;

            

    

     

    
      	
               
      

            	
              (b)

            	
              any
      expropriation, confiscation, requisition or acquisition of the Ship,
      whether for full consideration, a consideration less than her proper
      value, a nominal consideration or without any consideration, which is
      effected by any government or official authority or by any person or
      persons claiming to be or to represent a government or official authority,
      excluding a requisition for hire for a fixed period not exceeding one year
      without any right to an extension;

            

    

     

    
      	
               
      

            	
              (c)

            	
              any
      condemnation of the Ship by any tribunal or by any person or person
      claiming to be a tribunal;

            

    

     

    
      	
               
      

            	
              (d)

            	
              any
      arrest, capture, seizure or detention of the Ship (including any hijacking
      or theft) unless she is within 30 days redelivered to the full control the
      relevant Owner;

            

    

     

    
      	
               
      

            	
              “Total Loss Date”
      means:

            

    

     

    
      	
               
      

            	
              (a)

            	
              in
      the case of an actual loss of a Ship, the date on which it occurred or, if
      that is unknown, the date when that Ship was last heard
  of;

            

    

     

    
      	
               
      

            	
              (b)

            	
              in
      the case of a constructive, compromised, agreed or arranged total loss of
      a Ship, the earliest of:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      date on which a notice of abandonment is given to the insurers;
      and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      date of any compromise, arrangement or agreement made by or on behalf of
      the relevant Owner, with the Ship's insurers in which the insurers agree
      to treat the Ship as a total loss;
and

            

    

     

    
      	
               
      

            	
              (c)

            	
              in
      the case of any other type of total loss, on the date (or the most likely
      date) on which it appears to the Agent that the event constituting the
      total loss occurred;

            

    

     

    
      	
               
      

            	
              “Transfer
      Certificate”  has the meaning given in Clause
      26.2;

            

    

     

    
      	
               
      

            	
              “Transaction” has the
      meaning given in the Master
Agreement;

            

    

     

    
      	
               
      

            	
              “Trust Property” has the
      meaning given in clause 3.1 of the Agency and Trust Deed;
    and

            

    

     

    
      	
               
      

            	
              “Working
      Capital”  means, Current Assets less Current
      Liabilities

            

    

     

    
      	
              1.2

            	
              Construction of certain
      terms.  In this
Agreement:

            

    

     

    
      	
               
      

            	
              “approved” means, for the
      purposes of Clause 13, approved in writing by the
  Agent;

            

    

     

    
      	
               
      

            	
              “asset” includes every
      kind of property, asset, interest or right, including any present, future
      or contingent right to any revenues or other
  payment;

            

    

     

    
      	
               
      

            	
              “company” includes any
      partnership, joint venture and unincorporated
  association;

            

    

     

    “consent” includes an
authorisation, consent, approval, resolution, licence, exemption, filing,
registration, notarisation and legalisation;

     

    
      	
               
      

            	
              “contingent liability”
      means a liability which is not certain to arise and/or the amount of which
      remains unascertained;

            

    

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

            	
              “document” includes a
      deed; also a letter, fax or telex;

            

    

     

    
      	
               
      

            	
              “excess risks” means, in
      relation to a Ship, the proportion of claims for general average, salvage
      and salvage charges not recoverable under the hull and machinery policies
      in respect of the Ship in consequence of her insured value being less than
      the value at which that Ship is assessed for the purpose of such
      claims;

            

    

     

    
      	
               
      

            	
              “expense” means any kind
      of cost, charge or expense (including all legal costs, charges and
      expenses) and any applicable value added or other
  tax;

            

    

     

    
      	
               
      

            	
              “law” includes any form
      of delegated legislation, any order or decree, any treaty or international
      convention and any regulation or resolution of the Council of the European
      Union, the European Commission, the United Nations or its Security
      Council;

            

    

     

    
      	
               
      

            	
              “legal or administrative
      action” means any legal proceeding or arbitration and any
      administrative or regulatory action or
  investigation;

            

    

     

    
      	
               
      

            	
              “liability” includes
      every kind of debt or liability (present or future, certain or
      contingent), whether incurred as principal or surety or
      otherwise;

            

    

     

    
      	
               
      

            	
              “months” shall be
      construed in accordance with Clause
1.3;

            

    

     

    
      	
               
      

            	
              “obligatory insurances”
      means, in relation to a Ship, all insurances effected, or which the
      Borrower and/or the Owner owning the Ship is obliged to effect, under
      Clause 13 below or any other provision of this Agreement or another
      Finance Document;

            

    

     

    
      	
               
      

            	
              “parent company” has the
      meaning given in Clause 1.4;

            

    

     

    
      	
               
      

            	
              “person” includes any
      company; any state, political sub-division of a state and local or
      municipal authority; and any international
  organisation;

            

    

     

    
      	
               
      

            	
              “policy”, in relation to
      any insurance, includes a slip, cover note, certificate of entry or other
      document evidencing the contract of insurance or its
  terms;

            

    

     

    
      	
               
      

            	
              “protection and indemnity
      risks” means the usual risks covered by a protection and indemnity
      association managed in London, including pollution risks and the
      proportion (if any) of any sums payable to any other person or persons in
      case of collision which are not recoverable under the hull and machinery
      policies by reason of the incorporation therein of clause 1 of the
      Institute Time Clauses (Hulls)(1/10/83) or clause 8 of the Institute Time
      Clauses (Hulls) (1/11/1995) or the Institute Amended Running Down Clause
      (1/10/71) or any equivalent
provision;

            

    

     

    “regulation” includes any
regulation, rule, official directive, request or guideline (either having the
force of law or compliance with which is reasonable in the ordinary course of
business of the party concerned) of any governmental, intergovernmental or
supranational body, agency, department or regulatory, self-regulatory or other
authority or organisation;

     

    
      	
               
      

            	
              “subsidiary” has the
      meaning given in Clause 1.4;

            

    

     

    “successor” includes any person
who is entitled (by assignment, novation, merger or otherwise) to any other
person’s rights under this Agreement or any other Finance Document (or any
interest in those rights) or who, as administrator, liquidator or otherwise, is
entitled to exercise those rights; and in particular references to a successor
include a person to whom those rights (or any interest in those rights) are
transferred or pass as a result of a merger, division, reconstruction or other
reorganisation of it or any other person;

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

            	
              “tax” includes any
      present or future tax, duty, impost, levy or charge of any kind which is
      imposed by any state, any political sub-division of a state or any local
      or municipal authority (including any such imposed in connection with
      exchange controls), and any connected penalty, interest or fine;
      and

            

    

     

    
      	
               
      

            	
              “war risks” means the
      risks according to Institute War and Strike Clauses (Hull Time) (1/10/83)
      or (1/11/95), or equivalent conditions, including, but not limited to risk
      of mines, blocking and trapping, missing vessel, confiscation, vandalism,
      sabotage and malicious mischief and all risks excluded from the standard
      form of English or other marine
policy.

            

    

     

    
      	
              1.3

            	
              Meaning of “month”.  A
      period of one or more “months” ends on the day in the relevant calendar
      month numerically corresponding to the day of the calendar month on which
      the period started (“the
      numerically corresponding day”),
but:

            

    

     

    
      	
              (a)

            	
              on
      the Business Day following the numerically corresponding day if the
      numerically corresponding day is not a Business Day or, if there is no
      later Business Day in the same calendar month, on the Business Day
      preceding the numerically corresponding day;
or

            

    

     

    
      	
              (b)

            	
              on
      the last Business Day in the relevant calendar month, if the period
      started on the last Business Day in a calendar month or if the last
      calendar month of the period has no numerically corresponding
      day;

            

    

     

     and “month” and “monthly” shall be construed
accordingly.

     

    
      	
              1.4

            	
              Meaning of “subsidiary”.  A
      company (S) is a subsidiary of another company (P)
  if:

            

    

     

    
      	
              (a)

            	
              a
      majority of the issued shares in S (or a majority of the issued shares in
      S which carry unlimited rights to capital and income distributions) are
      directly owned by P or are indirectly attributable to P;
  or

            

    

     

    
      	
              (b)

            	
              P
      has direct or indirect control over a majority of the voting rights
      attached to the issued shares of S;
or

            

    

     

    
      	
              (c)

            	
              P
      has the direct or indirect power to appoint or remove a majority of the
      directors of S; or

            

    

     

    
      	
              (d)

            	
              P
      otherwise has the direct or indirect power to ensure that the affairs of S
      are conducted in accordance with the wishes of
  P;

            

    

     

    and any company of which S is a
subsidiary is a parent company of S.

     

    
      	
              1.5

            	
              General
      Interpretation.

            

    

     

    
      	
              (a)

            	
              In
      this Agreement:

            

    

     

    
      	
               
      

            	
              (i)

            	
              references
      to, or to a provision of, a Finance Document or any other document are
      references to it as amended or supplemented, whether before the date of
      this Agreement or otherwise;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              references
      to, or to a provision of, any law include any amendment, extension,
      re-enactment or replacement, whether made before the date of this
      Agreement or otherwise; and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              words
      denoting the singular number shall include the plural and vice
      versa.

            

    

     

    
      	
              (b)

            	
              Clauses
      1.1 to 1.4 and paragraph (a) of this Clause 1.5 apply unless the contrary
      intention appears.

            

    

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    

     

    
      	
              (c)

            	
              References
      in Clause 1.1 to a document being in the form of a particular Appendix or
      Schedule include references to that form with any modifications to that
      form which the Agent (with the authorisation of the Majority Lenders in
      the case of substantial modifications) approves or reasonably
      requires.

            

    

     

    
      	
              (d)

            	
              The
      clause headings shall not affect the interpretation of this
      Agreement.

            

    

     

    
      	
              2

            	
              FACILITY

            

    

     

    
      	
              2.1

            	
              Amount and purpose of
      facility.  Subject to the other provisions of this
      Agreement, the Lenders shall make available to the Borrower a revolving
      credit facility in an amount of up to $89,000,000.  The Loan
      shall be used initially in part-financing or refinancing the purchase
      price of the Initial Ships.

            

    

     

    
      	
              2.2

            	
              Lenders' participations in
      Loan.  Subject to the other provisions of this Agreement,
      each Lender shall participate in each Advance in the proportion which, as
      at the relevant Drawdown Date, its Commitment bears to the Total
      Commitments.

            

    

     

    
      	
              2.3

            	
              Lenders' participations in
      Loan.  Subject to the other provisions of this Agreement,
      each Lender shall participate in each Advance in the proportion which, as
      at the relevant Drawdown Date, its Commitment bears to the Total
      Commitments.

            

    

     

    
      	
              2.4

            	
              Purpose of
      Advances.  The Borrower undertakes with each Creditor
      Party to use each Advance only for the purpose stated in the preamble to
      this Agreement.

            

    

     

    
      	
              3

            	
              POSITION
      OF THE LENDERS, THE SWAP BANK AND THE MAJORITY
  LENDERS

            

    

     

    
      	
              3.1

            	
              Interests of Lenders and Swap
      Bank several.  The rights of the Lenders and the Swap
      Bank under this Agreement and the Master Agreement are several;
      accordingly (a) each Lender shall be entitled to sue for any amount which
      has become due and payable by the Borrower to it under this Agreement; and
      (b) the Swap Bank shall be entitled to sue for any amount which has become
      due and payable by the Borrower to it under the Master Agreement without
      joining the Agent, the Security Trustee or any other Lender or the Swap
      Bank as additional parties in the
proceedings.

            

    

     

    
      	
              3.2

            	
              Proceedings by individual
      Lender or Swap Bank.  However, without the prior consent
      of the Majority Lenders, neither a Lender nor a Swap Bank may bring
      proceedings in respect of:

            

    

     

    
      	
              (a)

            	
              any
      other liability or obligation of the Borrower or a Security Party under or
      connected with a Finance Document or the Master Agreement;
    or

            

    

     

    
      	
              (b)

            	
              any
      misrepresentation or breach of warranty by the Borrower or a Security
      Party in or connected with a Finance Document or the Master
      Agreement.

            

    

     

    
      	
              3.3

            	
              Obligations
      several.  The obligations of the Lenders under this
      Agreement and of the Swap Bank under the Master Agreement are several; and
      a failure of a Lender to perform its obligations under this Agreement or
      of the Swap Bank to perform its obligations under the Master Agreement
      shall not result in:

            

    

     

    
      	
              (a)

            	
              the
      obligations of the other Lenders being increased;
  nor

            

    

     

    
      	
              (b)

            	
              the
      Borrower, any Security Party or any other Creditor Party being discharged
      (in whole or in part) from its obligations under any Finance
      Document;

            

    

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

            	
              and
      in no circumstances shall a Lender have any responsibility for a failure
      of another Lender or the Swap Bank to perform its obligations under this
      Agreement and the Master Agreement.

            

    

     

    
      	
              3.4

            	
              Parties bound by certain
      actions of Majority Lenders.  Every Lender, the Swap
      Bank, the Borrower and each Security Party shall be bound
    by:

            

    

     

    
      	
              (a)

            	
              any
      determination made, or action taken, by the Majority Lenders under any
      provision of a Finance Document;

            

    

     

    
      	
              (b)

            	
              any
      instruction or authorisation given by the Majority Lenders to the Agent or
      the Security Trustee under or in connection with any Finance
      Document;

            

    

     

    
      	
              (c)

            	
              any
      action taken (or in good faith purportedly taken) by the Agent or the
      Security Trustee in accordance with such an instruction or
      authorisation.

            

    

     

    
      	
              3.5

            	
              Reliance on action of
      Agent.  However, the Borrower and each Security
      Party:

            

    

     

    
      	
              (a)

            	
              shall
      be entitled to assume that the Majority Lenders have duly given any
      instruction or authorisation which, under any provision of a Finance
      Document, is required in relation to any action which the Agent has taken
      or is about to take; and

            

    

     

    
      	
              (b)

            	
              shall
      not be entitled to require any evidence that such an instruction or
      authorisation has been given.

            

    

     

    
      	
              3.6

            	
              Construction.  In
      Clauses 3.4 and 3.5 references to action taken include (without
      limitation) the granting of any waiver or consent, an approval of any
      document and an agreement to any
matter.

            

    

     

    
      	
              4

            	
              DRAWDOWN

            

    

     

    
      	
              4.1

            	
              Request for
      Advance.  Subject to the following conditions, the
      Borrower may request an Advance to be made by ensuring that the Agent
      receives a completed Drawdown Notice not later than 11.00 a.m. (Edinburgh
      time) 3 Business Days prior to the intended Drawdown
  Date.

            

    

     

    
      	
              4.2

            	
              Availability.  The
      conditions referred to in Clause 4.1 are
that:

            

    

     

    
      	
              (a)

            	
              a
      Drawdown Date has to be a Business Day during the Availability
      Period;

            

    

     

    
      	
              (b)

            	
              the
      Drawdown Date in relation to the Initial Ships Advance shall be a Business
      Day falling on or before the Initial Borrowing
  Date;

            

    

     

    
      	
              (c)

            	
              the
      Initial Ships Advance shall be in an amount of up to
      $89,000,000;

            

    

     

    
      	
              (d)

            	
              any
      Future Ship Advance shall be in an amount which when aggregated with all
      Advances outstanding at the relevant time does not exceed 60 per cent. of
      the aggregate Market Value to the Future Ship to be financed by that
      Future Ship Advance and all other Ships subject to a Mortgage at that
      time; and

            

    

     

    
      	
              (e)

            	
              the
      aggregate of the Advances shall not exceed the Total
      Commitments.

            

    

     

    
      	
              4.3

            	
              Notification to Lenders of
      receipt of a Drawdown Notice.  The Agent shall promptly
      notify the Lenders that it has received a Drawdown Notice and shall inform
      each Lender of:

            

    

     

    
      	
              (a)

            	
              the
      amount of the Advance and the Drawdown
Date;

            

    

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    

     

    
      	
              (b)

            	
              the
      amount of that Lender's participation in the Advance;
  and

            

    

     

    
      	
              (c)

            	
              the
      duration of the first Interest Period applicable to that
      Advance.

            

    

     

    
      	
              4.4

            	
              Drawdown Notice
      irrevocable.  A Drawdown Notice must be signed by a
      director of the Borrower; and once served, a Drawdown Notice cannot be
      revoked without the prior written consent of the Agent, acting on the
      authority of the Majority Lenders.

            

    

     

    
      	
              4.5

            	
              Lenders to make available
      Contributions.  Subject to the provisions of this
      Agreement, each Lender shall, on and with value on each Drawdown Date,
      make available to the Agent for the account of the Borrower the amount due
      from that Lender on that Drawdown Date under Clause
  2.2.

            

    

     

    
      	
              4.6

            	
              Disbursement of
      Advance.  Subject to the provisions of this Agreement,
      the Agent shall on each Drawdown Date pay to the Borrower the amounts
      which the Agent receives from the Lenders under Clause 4.5; and that
      payment to the Borrower shall be
made:

            

    

     

    
      	
              (a)

            	
              to
      the account which the Borrower specifies in the relevant Drawdown Notice;
      and

            

    

     

    
      	
              (b)

            	
              in
      the like funds as the Agent received the payments from the
      Lenders.

            

    

     

    
      	
              4.7

            	
              Disbursement of Advance to
      third party.   The payment by the Agent under Clause
      4.6 to a third party specified in the relevant Drawdown  Notice
      shall constitute the making of the Advance and the Borrower shall
      thereupon become indebted, as principal and direct obligor, to each Lender
      in an amount equal to that Lender's
  Contribution.

            

    

     

    
      	
              5

            	
              INTEREST

            

    

     

    
      	
              5.1

            	
              Payment of normal
      interest.  Subject to the provisions of this Agreement,
      interest on each Advance and the Loan and each part thereof in respect of
      each Interest Period shall be paid by the Borrower on the last day of that
      Interest Period.

            

    

     

    
      	
              5.2

            	
              Normal rate of
      interest.  Subject to the provisions of this Agreement,
      the rate of interest on each Advance and the Loan and each part thereof in
      respect of an Interest Period shall be the aggregate of (i) the applicable
      Margin, (ii) the Mandatory Cost (if any) and (iii)
  LIBOR.

            

    

     

    
      	
              5.3

            	
              Payment of accrued
      interest.  In the case of an Interest Period longer than
      3 months, accrued interest shall be paid every 3 months during that
      Interest Period and on the last day of that Interest
    Period.

            

    

     

    
      	
              5.4

            	
              Notification of Interest
      Periods and rates of normal interest.  The Agent shall
      notify the Borrower and each Lender
of:

            

    

     

    
      	
              (a)

            	
              each
      rate of interest; and

            

    

     

    
      	
              (b)

            	
              the
      duration of each Interest Period;

            

    

     

     as soon as reasonably practicable
after each is determined.

     

    
      	
              5.5

            	
              Market
      disruption.  The following provisions of this Clause 5
      apply if:

            

    

     

    
      	
              (a)

            	
              no
      rate is quoted on Reuters BBA Page LIBOR 01 and at least half of the total
      number of Lenders at any time do not, before 1.00 p.m. (Edinburgh time) on
      the second Business Day before the commencement of an Interest Period,
      provide quotations to the Agent in order to fix LIBOR;
  or

            

    

     

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    

     

    
      	
              (b)

            	
              at
      least one Business Day before the start of an Interest Period, Lenders
      having Contributions together amounting to more than 50 per cent. of the
      Loan (or, if an Advance has not been made, Commitments amounting to more
      than 50 per cent. of the Total Commitments) notify the Agent that LIBOR
      fixed by the Agent would not accurately reflect the cost to those Lenders
      of funding their respective Contributions (or any part of them) during the
      Interest Period in the London Interbank Dollar Market at or about 11.00
      a.m. (London time) on the second Business Day before the commencement of
      the Interest Period; or

            

    

     

    
      	
              (c)

            	
              at
      least one Business Day before the start of an Interest Period, the Agent
      is notified by a Lender (the “Affected Lender”) that
      for any reason it is unable to obtain Dollars in the London Interbank
      Market in order to fund its Contribution (or any part of it) during the
      Interest Period.

            

    

     

    
      	
              5.6

            	
              Notification of market
      disruption.  The Agent shall promptly notify the Borrower
      and each of the Lenders stating the circumstances falling within Clause
      5.5 which have caused its notice to be
given.

            

    

     

    
      	
              5.7

            	
              Suspension of
      drawdown.  If the Agent's notice under Clause 5.6 is
      served before an Advance is made:

            

    

     

    
      	
              (a)

            	
              in
      a case falling within paragraphs (a) or (b) of Clause 5.5, the Lenders'
      obligations to make the Advance;

            

    

     

    
      	
              (b)

            	
              in
      a case falling within paragraph (c) of Clause 5.5, the Affected Lender's
      obligation to participate in the
Advance;

            

    

     

    
      	
               
      

            	
              shall
      be suspended while the circumstances referred to in the Agent's notice
      continue.

            

    

     

    
      	
              5.8

            	
              Negotiation of alternative rate
      of interest.  If the Agent’s notice under Clause 5.6 is
      served after an Advance is made, the Borrower, the Agent and the Lenders
      or (as the case may be) the Affected Lender shall use reasonable
      endeavours to agree, within the 30 days after the date on which the Agent
      serves its notice under Clause 5.6 (the “Negotiation Period”), an
      alternative interest rate or (as the case may be) an alternative basis for
      the Lenders or (as the case may be) the Affected Lender to fund or
      continue to fund their or its Contribution to the relevant Advance or
      Advances during the Interest Period
concerned.

            

    

     

    
      	
              5.9

            	
              Application of agreed
      alternative rate of interest.  Any alternative interest
      rate or an alternative basis which is agreed during the Negotiation Period
      shall take effect in accordance with the terms
  agreed.

            

    

     

    
      	
              5.10

            	
              Alternative rate of interest in
      absence of agreement.  If an alternative interest rate or
      alternative basis is not agreed within the Negotiation Period, and the
      relevant  circumstances are continuing at the end of the
      Negotiation Period, then the Agent shall, with the agreement of each
      Lender or (as the case may be) the Affected Lender, set an interest period
      and interest rate representing the cost of funding of the Lenders or (as
      the case may be) the Affected Lender in Dollars or in any available
      currency of their or its Contribution to the relevant Advance or Advances
      plus the Mandatory Cost (if any) and the applicable Margin; and the
      procedure provided for by this Clause 5.10 shall be repeated if the
      relevant circumstances are continuing at the end of the interest period so
      set by the Agent.

            

    

     

    
      	
              5.11

            	
              Notice of
      prepayment.  If the Borrower does not agree with an
      interest rate set by the Agent under Clause 5.10, the Borrower may give
      the Agent not less than 15 Business Days' notice of its intention to
      prepay the relevant Advance or Advances at the end of the interest period
      set by the Agent.

            

    

     

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    

     

    
      	
              5.12

            	
              Prepayment; termination of
      Commitments.  A notice under Clause 5.11 shall be
      irrevocable; the Agent shall promptly notify the Lenders or (as the case
      may require) the Affected Lender of the Borrower’s notice of intended
      prepayment; and:

            

    

     

    
      	
              (a)

            	
              on
      the date on which the Agent serves that notice, the Total Commitments or
      (as the case may require) the Commitment of the Affected Lender shall be
      cancelled; and

            

    

     

    
      	
              (b)

            	
              on
      the last Business Day of the interest period set by the Agent, the
      Borrower shall prepay (without premium or penalty) the Loan or, as the
      case may be, the Affected Lender's Contribution, together with accrued
      interest thereon at the applicable rate plus the applicable Margin and the
      Mandatory Cost (if any).

            

    

     

    
      	
              5.13

            	
              Application of
      prepayment.  The provisions of Clause 8 shall apply in
      relation to the prepayment.

            

    

     

    
      	
              5.14

            	
              Determination of Leverage
      Ratio.  The Agent shall calculate the Leverage Ratio on
      the first Drawdown Date and on each Compliance Date thereafter (each a
      “Margin Calculation
      Date”) for the purposes of calculating the Margin and shall advise
      the Borrower and the Lenders in writing, within 10 Business Days of each
      Margin Calculation Date, of the Margin which will apply for the 3-month
      period commencing on the relevant Margin Calculation Date  Provided
      that  in respect of each Margin Calculation Date other
      than the first Margin Calculation Date, the Agent shall only be obliged to
      advise the Borrowers and the Lenders of the Margin which will apply for
      the 3-month period commencing on the relevant Margin Calculation Date if
      that Margin will be different to the Margin which applies immediately
      prior to the relevant Margin Calculation
Date.

            

    

     

    For
the purposes of calculating the Leverage Ratio pursuant to this Clause 5.14, the
Market Value of the Ships shall be determined no more than 15 days prior to the
relevant Margin Calculation Date.

    

    
      	
              6

            	
              INTEREST
      PERIODS

            

    

     

    
      	
              6.1

            	
              Commencement of Interest
      Periods.  The first Interest Period applicable to an
      Advance shall commence on the Drawdown Date relative to that Advance and
      each subsequent Interest Period shall commence on the expiry of the
      preceding Interest Period.

            

    

     

    
      	
              6.2

            	
              Duration of normal Interest
      Periods.  Each Interest Period in respect of each Advance
      shall be:

            

    

     

    
      	
              (a)

            	
              1,
      3 or 6 months as notified by the Borrower to the Agent not later than
      11.00 a.m. (Edinburgh time) 3 Business Days before the commencement of the
      Interest Period  Provided that there may
      be no more than 6 Interest Periods having a duration of 1 month in any
      calendar year; or

            

    

     

    
      	
              (b)

            	
              in
      the case of the first Interest Period applicable to the second and any
      subsequent Advance, a period ending on the last day of the then current
      Interest Period whereupon all of the Advances shall be consolidated and
      treated as a single Advance;

            

    

     

    
      	
              (c)

            	
              3
      months, if the Borrower fails to notify the Agent by the time specified in
      paragraph (a) above; or

            

    

     

    
      	
              (d)

            	
              such
      other period as the Agent may, with the Majority Lenders' authority, agree
      with the Borrower.

            

    

     

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    

     

    
      	
              7

            	
              DEFAULT
      INTEREST

            

    

     

    
      	
              7.1

            	
              Payment of default interest on
      overdue amounts.  The Borrower shall pay interest in
      accordance with the following provisions of this Clause 7 on any amount
      payable by the Borrower under any Finance Document which the Agent, the
      Security Trustee or the other designated payee does not receive on or
      before the relevant date, that is:

            

    

     

    
      	
              (a)

            	
              the
      date on which the Finance Documents provide that such amount is due for
      payment; or

            

    

     

    
      	
              (b)

            	
              if
      a Finance Document provides that such amount is payable on demand, the
      date on which the demand is served;
or

            

    

     

    
      	
              (c)

            	
              if
      such amount has become immediately due and payable under Clause 19.4, the
      date on which it became immediately due and
  payable.

            

    

     

    
      	
              7.2

            	
              Default rate of
      interest.  Interest shall accrue on an overdue amount
      from (and including) the relevant date until the date of actual payment
      (as well after as before judgment) at the rate per annum determined by the
      Agent to be 2 per cent. above:

            

    

     

    
      	
              (a)

            	
              in
      the case of an overdue amount of principal, the higher of the rates set
      out at paragraphs (a) and (b) of Clause 7.3;
or

            

    

     

    
      	
              (b)

            	
              in
      the case of any other overdue amount, the rate set out at paragraph (b) of
      Clause 7.3.

            

    

     

    
      	
              7.3

            	
              Calculation of default rate of
      interest.  The rates referred to in Clause 7.2
      are:

            

    

     

    
      	
              (a)

            	
              the
      rate applicable to the overdue principal amount immediately prior to the
      relevant date (but only for any unexpired part of any then current
      Interest Period);

            

    

     

    
      	
              (b)

            	
              the
      aggregate of the Mandatory Cost (if any) and the applicable Margin plus,
      in respect of successive periods of any duration (including at call) up to
      3 months which the Agent may select from time to
  time:

            

    

     

    
      	
               
      

            	
              (i)

            	
              LIBOR;
      or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              if
      the Agent determines that Dollar deposits for any such period are not
      being made available to a Lender or (as the case may be) Lenders by
      leading banks in the London Interbank Market in the ordinary course of
      business, a rate from time to time determined by the Agent by reference to
      the cost of funds to the Agent from such other sources as the Agent may
      from time to time determine.

            

    

     

    
      	
              7.4

            	
              Notification of interest
      periods and default rates.  The Agent shall promptly
      notify the Lenders and the Borrower of each interest rate determined by
      the Agent under Clause 7.3 and of each period selected by the Agent for
      the purposes of paragraph (b) of that Clause; but this shall not be taken
      to imply that the Borrower is liable to pay such interest only with effect
      from the date of the Agent's
notification.

            

    

     

    
      	
              7.5

            	
              Payment of accrued default
      interest.  Subject to the other provisions of this
      Agreement, any interest due under this Clause shall be paid on the last
      day of the period by reference to which it was determined; and the payment
      shall be made to the Agent for the account of the Creditor Party to which
      the overdue amount is due.

            

    

     

    
      	
              7.6

            	
              Compounding of default
      interest.  Any such interest which is not paid at the end
      of the period by reference to which it was determined shall thereupon be
      compounded.

            

    

     

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    

     

    
      	
              7.7

            	
              Application to Master
      Agreement.  For the avoidance of doubt, this Clause 7
      does not apply to any amount payable under the Master Agreement in respect
      of any continuing Designated Transaction as to which section 2(e) (Default
      Interest; Other Amounts) of the Master Agreement shall
    apply.

            

    

     

    
      	
              8

            	
              REPAYMENT
      REDUCTION, REPAYMENT AND PREPAYMENT

            

    

     

    
      	
              8.1

            	
              Reduction of
      Facility.  The Total Commitments shall be reduced and/or
      repaid in accordance with the following provisions of this Clause 8.1 so
      that:

            

    

     

    
      	
              (a)

            	
              the
      initial maximum amount or, as the case may be, the amount for the time
      being of the Total Commitments shall be reduced and/or repaid in
      accordance with Schedule 9;

            

    

     

    
      	
              (b)

            	
              in
      addition, the initial maximum amount or, as the case may be, the maximum
      available amount for the time being of the Loan shall be reduced by (and
      the reduction/repayment amounts set out in Schedule 9 shall be reduced
      proportionately by an aggregate amount equal
  to):

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      amount of such portion(s) of the Total Commitments as may from time to
      time be cancelled by the Borrower pursuant to Clause 8.7 (Optional
      facility cancellation); and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      amount of any reduction(s) and/or prepayment(s) and/or repayments required
      to be made under or pursuant to:

            

    

     

    
      	
               
      

            	
              (A)

            	
              Clause
      5.12 (Prepayment; termination of Commitments);
  or

            

    

     

    
      	
               
      

            	
              (B)

            	
              Clause
      8.3 (Mandatory reduction on Total Loss);
or

            

    

     

    
      	
               
      

            	
              (C)

            	
              Clause
      8.4 (Mandatory reduction on sale of Ship);
or

            

    

     

    
      	
               
      

            	
              (D)

            	
              Clause
      8.5 (Reduction of Initial Total Commitments);
or

            

    

     

    
      	
               
      

            	
              (E)

            	
              Clause
      15.1 (Provision of additional security cover; prepayment of Loan);
      or

            

    

     

    
      	
               
      

            	
              (F)

            	
              Clause
      19.3 (Termination of Commitments);
or

            

    

     

    
      	
               
      

            	
              (G)

            	
              Clause
      23.3 (Prepayment; Termination of Commitment);
or

            

    

     

    
      	
               
      

            	
              (H)

            	
              Clause
      24.5 (Prepayment; Termination of
Commitment);

            

    

     

    
      	
              (c)

            	
              the
      final Repayment Date shall be on the Final Maturity
  Date.

            

    

     

    
      	
              8.2

            	
              Repayments.  The
      Borrower shall:

            

    

     

    
      	
              (a)

            	
              on
      each Repayment Date specified in Schedule 9, make such repayment (if any)
      of the Total Commitments as shall be necessary to reduce the amount
      outstanding immediately prior to such Repayment Date to the maximum amount
      as at such Repayment Date (as such amount is indicated in the final column
      of Schedule 9);

            

    

     

    
      	
              (b)

            	
              on
      each other Repayment Date on which, under any applicable provision of this
      Agreement, the amount of the Total Commitments is required to be reduced
      and/or a prepayment of the Loan made, make such prepayment (if any) of the
      Loan as shall be necessary to reduce the amount outstanding immediately
      prior to such Repayment Date to the maximum amount of the Total
      Commitments as at such Repayment Date;
and

            

    

     

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

    

     

    
      	
              (c)

            	
              on
      the final Repayment Date, repay the outstanding amount of the Loan (if
      any) and shall additionally pay to the Agent for the account of the
      Creditor Parties all further amounts outstanding or payable under this
      Agreement and the other Finance
Documents.

            

    

     

    
      	
              8.3

            	
              Mandatory reduction on Total
      Loss. Subject to Clause 8.6 if any Ship becomes a Total Loss, the
      amount of the Total Commitments shall, on the earlier of (a) the date
      falling 120 days (or such longer period as the Agent, with the
      authorisation of the Majority Lenders, agrees) following the Total Loss
      Date and (b) upon receipt of the insurance proceeds by the Security
      Trustee, be reduced by (and the Loan repaid in) an amount equal to the
      Relevant Fraction of the Loan.

            

    

     

    
      	
              8.4

            	
              Mandatory reduction on sale of
      Ship.  Subject to Clause 8.6, if any Ship is sold, the
      amount of the Total Commitments shall, upon the date on which the sale is
      completed by delivery of the Ship to its buyer, be reduced by (and the
      Loan repaid in) an amount equal to the Relevant Fraction of the
      Loan.

            

    

     

    
      	
              8.5

            	
              Reduction of initial Total
      Commitments.  If any part of the Total Commitments have
      not been borrowed by the last day of the Availability Period, the Total
      Commitments shall on that date be permanently cancelled by an amount equal
      to such undrawn amount.

            

    

     

    
      	
              8.6

            	
              Reborrowing in case of sale or
      Total Loss of Ship.  Notwithstanding the provisions of
      Clauses 8.3 and 8.4 (but subject to the other provisions of this
      Agreement), if a Ship is sold or becomes a Total Loss the Borrower may by
      notice in writing to the Agent deposit the proceeds arising from the sale
      or Total Loss of that Ship in a blocked account with the Agent and such
      deposit will be available to the Borrower to finance or refinance a Future
      Ship subject to the following
conditions:

            

    

     

    
      	
              (a)

            	
              that
      the Future Ship is of a similar age, type, quality and condition to the
      Ship which was sold or lost;

            

    

     

    
      	
              (b)

            	
              that,
      following the acquisition, the provisions of Clause 4.2(d) would be
      satisfied;

            

    

     

    
      	
              (c)

            	
              that
      security over the Future Ship, its earnings and insurances is perfected on
      terms in all respects satisfactory to the Security Trustee;
      and

            

    

     

    
      	
              (d)

            	
              that
      the written consent of the Agent, acting with the authorisation of all the
      Lenders, is obtained;

            

    

     

    but
if any amount available to be reborrowed pursuant to this Clause 8.6 is not
reborrowed within 90 days (in the case of a sale of a Ship) or 180 days (in the
case of a Total Loss of a Ship) from the date on which the sale of the relevant
Ship is completed or the Total Loss Date applicable to the relevant Ship, the
Total Commitments shall be permanently reduced by a corresponding
amount.

    

    
      	
              8.7

            	
              Optional facility
      reduction.  The Borrower shall be entitled, upon giving
      to the Agent not less than 10 Business Days prior written notice (which
      notice shall be irrevocable), to cancel, in whole or in part, and, if in
      part, by an amount not less than $5,000,000 or a higher multiple of
      $1,000,000, the undrawn balance of the Total Commitments.  Upon
      such cancellation taking effect on expiry of such notice the several
      obligations of the Lenders to make their respective Commitments available
      in relation to the portion of the Total Commitments to which such notice
      relates shall terminate and the commitment fee (provided for by Clause
      20.1(a)) on such portion shall cease to accrue and the provisions of
      Clause 8.1(b)(i) shall apply.

            

    

     

    
      	
              8.8

            	
              Voluntary
      prepayment.  Subject to the following conditions, the
      Borrower may prepay the whole or any part of the Loan.  Those
      conditions are that:

            

    

     

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

    

     

    
      	
              (a)

            	
              a
      partial prepayment shall be not less than $5,000,000 or $1,000,000 or a
      higher multiple thereof;

            

    

     

    
      	
              (b)

            	
              the
      Agent has received from the Borrower at least 15 days’ prior written
      notice specifying the amount to be prepaid and the date on which the
      prepayment is to be made (such date to be the last day of an Interest
      Period);

            

    

     

    
      	
              (c)

            	
              the
      Borrower has provided evidence satisfactory to the Agent that any consent
      required by the Borrower or any Security Party in connection with the
      prepayment has been obtained and remains in
  force.

            

    

     

    
      	
              8.9

            	
              Effect of notice of
      prepayment.  A prepayment notice may not be withdrawn or
      amended without the consent of the Agent, given with the authorisation of
      the Majority Lenders, and the amount specified in the prepayment notice
      shall become due and payable by the Borrower on the date for prepayment
      specified in the prepayment notice.

            

    

     

    
      	
              8.10

            	
              Notification of notice of
      reduction or prepayment.  The Agent shall notify the
      Lenders promptly upon receiving a reduction or prepayment notice, and
      shall provide any Lender which so requests with a copy of any document
      delivered by the Borrower under Clause
8.8(c).

            

    

     

    
      	
              8.11

            	
              Amounts payable on repayment or
      prepayment.  A repayment or prepayment shall be made
      together with accrued interest (and any other amount payable under Clause
      21 or otherwise) in respect of the amount repaid or prepaid and, if the
      repayment or prepayment is not made on the last day of an applicable
      Interest Period together with any sums payable under Clause 21.1(b) but
      without premium or penalty.

            

    

     

    
      	
              8.12

            	
              Application of
      prepayments.  Each prepayment made pursuant to this
      Clause 8 shall be applied to reduce pro rata each scheduled repayment
      and/or reduction of the Total Commitments to be made on each Repayment
      Date pursuant to Clauses 8.1(a) and
8.1(b).

            

    

     

    
      	
              8.13

            	
              Reborrowing
      permitted.  Subject to the terms of this Agreement,
      amounts prepaid in respect of the Loan may be
  reborrowed.

            

    

     

    
      	
              8.14

            	
              Unwinding of Designated
      Transactions.  On or prior to any repayment or prepayment
      of the Loan under this Clause 8 or any other provision of this Agreement,
      the Borrower shall wholly or partially reverse, offset, unwind or
      otherwise terminate one or more of the continuing Designated Transactions
      to the extent necessary to ensure that the notional principal amount of
      the continuing Designated Transactions thereafter remaining does not and
      will not in the future (taking into account the scheduled amortisation)
      exceed the amount of the Loan as reducing from time to time thereafter
      pursuant to Clause 8.1.

            

    

     

    
      	
              8.15

            	
              Prepayment of Swap
      Benefit.  If a Designated Transaction is terminated in
      circumstances where the Swap Bank would be obliged to pay an amount to the
      Borrower under the Master Agreement, the Borrower hereby agrees that such
      payment shall be applied in prepayment of the Loan and authorises the Swap
      Bank to pay such amount to the Agent for such
  purpose.

            

    

     

    
      	
              9

            	
              CONDITIONS
      PRECEDENT

            

    

     

    
      	
              9.1

            	
              Documents, fees and no
      default.  Each Lender's obligation to contribute to an
      Advance is subject to the following conditions
  precedent:

            

    

     

    
      	
              (a)

            	
              that,
      on or before the date of this Agreement, the Agent receives the documents
      described in Part A of Schedule 4 in a form and substance satisfactory to
      the Agent and its lawyers;

            

    

     

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

    

     

    
      	
              (b)

            	
              that,
      on or before the service of the first Drawdown Notice, the Agent receives
      the documents described in Part B of Schedule 4 in a form and substance
      satisfactory to the Agent and its lawyers and the Borrower has, in
      relation to the Initial Ships Advance, satisfied its obligations under
      Clause 11.19;

            

    

     

    
      	
              (c)

            	
              that,
      on or before the Drawdown Date in respect of each Future Ship Advance, the
      Agent receives the documents described in Part C of Schedule 4 in a form
      and substance satisfactory to the Agent and its lawyers and the Borrower
      has, in relation to the relevant Future Ship Advance, satisfied its
      obligations under Clause 11.19;

            

    

     

    
      	
              (d)

            	
              that,
      on or before each Drawdown Date, the Agent receives all facility fees
      referred to in Clause 20.1 and in the Fee Letter which are payable at that
      time (including, without limitation, any accrued commitment fee) and has
      received payment of the expenses referred to in Clause
    20.2;

            

    

     

    
      	
              (e)

            	
              that
      both at the date of each Drawdown Notice and at each Drawdown
      Date:

            

    

     

    
      	
               
      

            	
              (i)

            	
              no
      Event of Default or Potential Event of Default has occurred and is
      continuing or would result from the borrowing of the relevant
      Advance;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      representations and warranties in Clause 10 and those of the Borrower or
      any Security Party which are set out in the other Finance Documents would
      be true and not misleading if repeated on each of those dates with
      reference to the circumstances then existing;
  and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              none
      of the circumstances contemplated by Clause 5.5 has occurred and is
      continuing;

            

    

     

    
      	
              (f)

            	
              that,
      if the ratio set out in Clause 15.1 were applied immediately following the
      making of each Advance, the Borrower would not be obliged to provide
      additional security or prepay part of the Loan under that Clause;
      and

            

    

     

    
      	
              (g)

            	
              that
      at each Drawdown Date the Agent has received, and found to be acceptable
      to it, any further opinions, consents, agreements and documents in
      connection with the Finance Documents which the Agent may, with the
      authorisation of the Majority Lenders, request by notice to the Borrower
      prior to the relevant Drawdown
Date.

            

    

     

    
      	
              9.2

            	
              Waiver of conditions
      precedent.  If the Majority Lenders, at their discretion,
      permit an Advance to be borrowed before certain of the conditions referred
      to in Clause 9.1 are satisfied, the Borrower shall ensure that those
      conditions are satisfied within 5 Business Days after the Drawdown Date
      relative to that Advance (or such longer period as the Agent may, with the
      authority of the Majority Lenders,
specify).

            

    

     

    
      	
              10

            	
              REPRESENTATIONS
      AND WARRANTIES

            

    

     

    
      	
              10.1

            	
              General.  The
      Borrower represents and warrants to each Creditor Party as
      follows.

            

    

     

    
      	
              10.2

            	
              Status.  The
      Borrower is duly incorporated and validly existing and in good standing
      under the laws of the Marshall
Islands.

            

    

     

    
      	
              10.3

            	
              Share capital and
      ownership.  The Borrower has an authorised share capital
      divided into 150,000,000 registered shares of $0.001 each, 25,744,983 of
      which shares have been issued each fully
paid.

            

    

     

    
      	
              10.4

            	
              Corporate
      power.  The Borrower has the corporate capacity, and has
      taken all corporate action and obtained all consents necessary for
      it:

            

    

     

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

    

     

    
      	
              (a)

            	
              to
      execute the Finance Documents to which it is a party;
  and

            

    

     

    
      	
              (b)

            	
              to
      borrow under this Agreement, enter into Designated Transactions under the
      Master Agreement and to make all the payments contemplated by, and to
      comply with, those Finance Documents to which the Borrower is a
      party.

            

    

     

    
      	
              10.5

            	
              Consents in
      force.  All the consents referred to in Clause 10.4
      remain in force and nothing has occurred which makes any of them liable to
      revocation.

            

    

     

    
      	
              10.6

            	
              Legal validity; effective
      Security Interests.  The Finance Documents to which the
      Borrower is a party, do now or, as the case may be, will, upon execution
      and delivery (and, where applicable, registration as provided for in the
      Finance Documents):

            

    

     

    
      	
              (a)

            	
              constitute
      the Borrower's legal, valid and binding obligations enforceable against
      the Borrower in accordance with their respective terms;
  and

            

    

     

    
      	
              (b)

            	
              create
      legal, valid and binding Security Interests enforceable in accordance with
      their respective terms over all the assets to which they, by their terms,
      relate

            

    

     

     subject to any relevant
insolvency laws affecting creditors' rights generally.

     

    
      	
              10.7

            	
              No third party Security
      Interests.  Without limiting the generality of Clause
      10.6, at the time of the execution and delivery of each Finance
      Document:

            

    

     

    
      	
              (a)

            	
              the
      Borrower will have the right to create all the Security Interests which
      that Finance Document purports to create;
and

            

    

     

    
      	
              (b)

            	
              no
      third party will have any Security Interest (except for Permitted Security
      Interests) or any other interest, right or claim over, in or in relation
      to any asset to which any such Security Interest, by its terms,
      relates.

            

    

     

    
      	
              10.8

            	
              No
      conflicts.  The execution by the Borrower of each Finance
      Document to which it is a party, and the borrowing by the Borrower of the
      Loan, and its compliance with each Finance Document to which it is a party
      will not involve or lead to a contravention
of:

            

    

     

    
      	
              (a)

            	
              any
      law or regulation; or

            

    

     

    
      	
              (b)

            	
              the
      constitutional documents of the Borrower;
or

            

    

     

    
      	
              (c)

            	
              any
      contractual or other obligation or restriction which is binding on the
      Borrower or any of its assets.

            

    

     

    
      	
              10.9

            	
              No withholding
      taxes.  All payments which the Borrower is liable to make
      under the Finance Documents may be made without deduction or withholding
      for or on account of any tax payable under any law of any Pertinent
      Jurisdiction.

            

    

     

    
      	
              10.10

            	
              No
      default.  No Event of Default or Potential Event of
      Default has occurred and is
continuing.

            

    

     

    
      	
              10.11

            	
              Information.  All
      information which has been provided in writing by or on behalf of the
      Borrower or any Security Party to any Creditor Party in connection with
      any Finance Document satisfied the requirements of Clause 11.5; all
      audited and unaudited accounts which have been so provided satisfied the
      requirements of Clause 11.7; and there has been no material adverse change
      in the financial position or state of affairs of the Borrower from that
      disclosed in the latest of those
accounts.

            

    

     

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

    

     

    
      	
              10.12

            	
              No
      litigation.  No legal or administrative action involving
      the Borrower has been commenced or taken or, to the Borrower’s knowledge,
      is likely to be commenced or taken.

            

    

     

    
      	
              10.13

            	
              No rebates
      etc.  There is no agreement or understanding to allow or
      pay any rebate, premium, commission, discount or other benefit or payment
      (howsoever described) to a third party in connection with the purchase by
      each Owner of the Future Ship to be owned by it, other than as disclosed
      to the Lenders in writing on or prior to the date of this
      Agreement.

            

    

     

    
      	
              10.14

            	
              Compliance with certain
      undertakings.  At the date of this Agreement, the
      Borrower is in compliance with Clauses 11.2, 11.4, 11.9 and
      11.13.

            

    

     

    
      	
              10.15

            	
              Taxes
      paid.  The Borrower has paid all taxes applicable to, or
      imposed on or in relation to the Borrower or its
  business.

            

    

     

    
      	
              10.16

            	
              ISM and ISPS Code
      compliance.  The Borrower will procure that the Owners
      and the Approved Manager obtain all necessary ISM Code Documentation and
      ISPS Code Documentation in connection with the Ships and comply with the
      ISM Code and the ISPS Code on or
before:

            

    

     

    
      	
              (a)

            	
              the
      date of this Agreement, in the case of each Initial Ship;
    and

            

    

     

    
      	
              (b)

            	
              the
      date on which each Ship is delivered to its Owner pursuant to the MOA
      relative to that Ship, in the case of each other
  Ship.

            

    

     

    
      	
              10.17

            	
              No money
      laundering.  Without prejudice to the generality of
      Clause 2.3, in relation to the borrowing by the Borrower of the Loan, the
      performance and discharge of its obligations and liabilities under the
      Finance Documents, and the transactions and other arrangements effected or
      contemplated by the Finance Documents to which the Borrower is a party,
      the Borrower confirms that it is acting for its own account and that the
      foregoing will not involve or lead to contravention of any law, official
      requirement or other regulatory measure or procedure implemented to combat
      “money laundering” (as defined in Article 1 of the Directive (91/308/EEC)
      of the Council of the European
Communities).

            

    

     

    
      	
              10.18

            	
              No
      immunity.  The Borrower is not, nor is any of its assets
      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).

            

    

     

    
      	
              11

            	
              GENERAL
      UNDERTAKINGS

            

    

     

    
      	
              11.1

            	
              General.  The
      Borrower undertakes with each Creditor Party to comply with the following
      provisions of this Clause 11 at all times during the Security Period
      except as the Agent may, with the authority of the Majority Lenders,
      otherwise permit.

            

    

     

    
      	
              11.2

            	
              Title; negative pledge and pari
      passu ranking.  The Borrower
  will:

            

    

     

    
      	
              (a)

            	
              own
      (directly or indirectly) the entire beneficial interest in each Owner free
      from all Security Interests and other interests and rights of every kind,
      except for those created by the Finance
  Documents;

            

    

     

    
      	
              (b)

            	
              not
      create or permit to arise any Security Interest (except for Permitted
      Security Interests) over any other asset, present or future (including,
      but not limited to the Borrower’s rights against the Swap Bank under the
      Master Agreement or all or any part of the
  Borrower’s

            

    

     

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

    interest
in any amount payable to the Borrower by the Swap Bank under the Master
Agreement) other than in the normal course of its business; and

     

    
      	
              (c)

            	
              procure
      that its liabilities under the Finance Documents to which it is a party do
      and will rank at least pari passu with all its other present and future
      unsecured liabilities, except for liabilities which are mandatorily
      preferred by law.

            

    

     

    
      	
              11.3

            	
              No disposal of
      assets.  The Borrower will not transfer, lease or
      otherwise dispose of:

            

    

     

    
      	
              (a)

            	
              all
      or a substantial part of its assets, whether by one transaction or a
      number of transactions, whether related or not;
  or

            

    

     

    
      	
              (b)

            	
              any
      debt payable to it or any other right (present, future or contingent
      right) to receive a payment, including any right to damages or
      compensation.

            

    

     

    
      	
              11.4

            	
              Restriction on other
      liabilities or obligations to be incurred.  The Borrower
      will not incur, and will procure that none of the Owners will, incur, any
      liability or obligation except liabilities and
  obligations:

            

    

     

    
      	
              (a)

            	
              under
      the MOAs and the Finance Documents to which each is a
    party;

            

    

     

    
      	
              (b)

            	
              under
      the Master Agreement (but in such case, only in connection with Designated
      Transactions); and

            

    

     

    
      	
              (c)

            	
              (in
      the case of each Owner) incurred in the normal course of its business of
      operating its Ship.

            

    

     

    
      	
              11.5

            	
              Information provided to be
      accurate.  All financial and other information which is
      provided in writing by or on behalf of the Borrower under or in connection
      with any Finance Document will be true and not misleading and will not
      omit any material fact or
consideration.

            

    

     

    
      	
              11.6

            	
              Provision of financial
      statements.  The Borrower will send to the
      Agent:

            

    

     

    
      	
              (a)

            	
              as
      soon as possible, but in no event later than 180 days after the end of
      each Financial Year (commencing with the Financial Year ended 31 December
      2006), the audited consolidated Financial Statements of the Group for that
      Financial Year;

            

    

     

    
      	
              (b)

            	
              as
      soon as possible, but in no event later than 90 days after the end of
      quarter of each Financial Year, the unaudited consolidated accounts of the
      Group for the most recent financial quarter which has ended  and
      additionally, in the case of each of the second, third and fourth
      financial quarters, the unaudited consolidated accounts of the Group for
      the period 1 January up to the end of the relevant financial quarter
      certified in each case as to their correctness by the chief financial
      officer of the Borrower;

            

    

     

    
      	
              (c)

            	
              together
      with the quarterly financial statements referred to in paragraph (b) above
      for each of the financial quarters in each Financial Year, at least two
      valuations of each Fleet Vessel each prepared by an Approved Broker (at
      the cost of the Borrower) in accordance with Clause 15.4, which valuations
      shall be used in determining the Security Cover Percentage pursuant to
      Clause 15.1 and the financial covenants referred to in Clause 12.4;
      and

            

    

     

    
      	
              (d)

            	
              promptly
      after each request by the Agent, such further financial information about
      the Borrower, the Group, the Ships, the other Fleet Vessels and the Owners
      (including, but not limited to, charter arrangements, Financial
      Indebtedness and operating expenses) as the Agent may
    require.

            

    

     

    
      	
              11.7

            	
              Form of financial
      statements.  All accounts (audited and unaudited)
      delivered under Clause 11.6 will:

            

    

     

    
      
         

      

      
        30

        
          

        

      

      
         

      

    

    

     

    
      	
              (a)

            	
              be
      prepared in accordance with all applicable laws and GAAP consistently
      applied;

            

    

     

    
      	
              (b)

            	
              in
      the case of the annual audited financial statements of the Group, be
      audited by an internationally renowned auditing firm and such financial
      statements shall not include any material
  qualifications;

            

    

     

    
      	
              (c)

            	
              give
      a true and fair view of the state of affairs of the Group at the date of
      those accounts and of its profit for the period to which those accounts
      relate; and

            

    

     

    
      	
              (d)

            	
              fully
      disclose or provide for all significant liabilities of the
      Group.

            

    

     

    
      	
              11.8

            	
              Shareholder and creditor
      notices.  The Borrower will send the Agent, at the same
      time as they are despatched, copies of all communications which are
      despatched to all of the Borrower's shareholders or creditors or any class
      of them.

            

    

     

    
      	
              11.9

            	
              Consents.  The
      Borrower will maintain in force and promptly obtain or renew, and will
      promptly send certified copies to the Agent of, all consents
      required:

            

    

     

    
      	
              (a)

            	
              for
      the Borrower to perform its obligations under any
      Finance  Document;

            

    

     

    
      	
              (b)

            	
              for
      the validity or enforceability of any Finance
  Document;

            

    

     

    
      	
              (c)

            	
              for
      each Owner to continue to own and operate the Ship owned by
      it,

            

    

     

     and the Borrower will comply (or
procure compliance) with the terms of all such consents.

     

    
      	
              11.10

            	
              Maintenance of Security
      Interests.  The Borrower
will:

            

    

     

    
      	
              (a)

            	
              at
      its own cost, do all that it reasonably can to ensure that any Finance
      Document validly creates the obligations and the Security Interests which
      it purports to create; and

            

    

     

    
      	
              (b)

            	
              without
      limiting the generality of paragraph (a) above, at its own cost, promptly
      register, file, record or enrol any Finance Document with any court or
      authority in all Pertinent Jurisdictions, pay any stamp, registration or
      similar tax in all Pertinent Jurisdictions in respect of any Finance
      Document, give any notice or take any other step which, in the opinion of
      the Majority Lenders, is or has become necessary or desirable for any
      Finance Document to be valid, enforceable or admissible in evidence or to
      ensure or protect the priority of any Security Interest which it
      creates.

            

    

     

    
      	
              11.11

            	
              Notification of
      litigation.  The Borrower will provide the Agent with
      details of any legal or administrative action involving the Borrower, any
      Security Party, the Approved Manager, any Ship or the Earnings or the
      Insurances of any Ship as soon as such action is instituted or it becomes
      apparent to the Borrower that it is likely to be instituted, unless it is
      clear that the legal or administrative action cannot be considered
      material in the context of any Finance
Document.

            

    

     

    
      	
              11.12

            	
              Principal place of
      business.  The Borrower will maintain its place of
      business, and keep its corporate documents and records, at the address
      stated in Clause 28.2(a);  and the Borrower will not establish,
      or do anything as a result of which it would be deemed to have, a place of
      business in any country other than the Marshall
  Islands.

            

    

     

    
      	
              11.13

            	
              Confirmation of no
      default.  The Borrower will, within 2 Business Days after
      service by the Agent of a written request, serve on the Agent a notice
      which is signed by 2 directors of the Borrower and
  which:

            

    

     

    
      	
              (a)

            	
              states
      that no Event of Default or Potential Event of Default has occurred;
      or

            

    

     

    
      
         

      

      
        31

        
          

        

      

      
         

      

    

    

     

    
      	
              (b)

            	
              states
      that no Event of Default or Potential Event of Default has occurred,
      except for a specified event or matter, of which all material details are
      given.

            

    

     

    
      	
               
      

            	
              The
      Agent may serve requests under this Clause 11.13 from time to time but
      only if asked to do so by a Lender or Lenders having Contributions
      exceeding 10 per cent. of the Loan or (if no Advance has been made)
      Commitments exceeding 10 per cent of the Total Commitments; and this
      Clause 11.13 does not affect the Borrower’s obligations under Clause
      11.14.

            

    

     

    
      	
              11.14

            	
              Notification of
      default.  The Borrower will notify the Agent as soon as
      the Borrower becomes aware of:

            

    

     

    
      	
              (a)

            	
              the
      occurrence of an Event of Default or a Potential Event of Default;
      or

            

    

     

    
      	
              (b)

            	
              any
      matter which indicates that an Event of Default or a Potential Event of
      Default may have occurred;

            

    

     

     and will thereafter keep the
Agent fully up-to-date with all developments.

     

    
      	
              11.15

            	
              Provision of further
      information.  The Borrower will, as soon as practicable
      after receiving the request, provide the Agent with any additional
      financial or other information
relating:

            

    

     

    
      	
              (a)

            	
              to
      the Borrower, any Owner, any Ship, the Approved Manager or any other
      Security Party, the Insurances or the Earnings;
  or

            

    

     

    
      	
              (b)

            	
              to
      any other matter relevant to, or to any provision of, a Finance
      Document

            

    

     

    which
may be requested by the Agent, the Security Trustee or any Lender at any
time.

     

    
      	
              11.16

            	
              Provision of copies and
      translation of documents.  The Borrower will supply the
      Agent with a sufficient number of copies of the documents referred to
      above to provide 1 copy for each Creditor Party; and if the Agent so
      requires in respect of any of those documents, the Borrower will provide a
      certified English translation prepared by a translator approved by the
      Agent.

            

    

     

    
      	
              11.17

            	
              Ownership.  The
      Borrower shall ensure that (a) it shall remain the direct or indirect
      owner of the whole of the issued share capital of each Owner and (b) there
      shall be no change in the legal and beneficial ownership of the shares in
      each Owner.

            

    

     

    
      	
              11.18

            	
              General and administrative
      costs.  The Borrow shall ensure that the payment of all
      the general and administrative costs of the Borrower and the Owners in
      connection with the ownership and operation of the Ships (including,
      without limitation, the payment of the management fees pursuant to the
      Management Agreements) shall be fully subordinated to the payment
      obligations of the Borrower and the Owners under this Agreement and the
      other Finance Documents throughout the Security
  Period.

            

    

     

    
      	
              11.19

            	
              Hedging of interest rate
      risks.  The Borrower shall by no later than each Drawdown
      Date enter into such Designated Transactions with the Swap Bank whereby
      for the period on and from the relevant Drawdown Date up to and including
      the Final Maturity Date, it will hedge all or the major part of the
      interest risk under this Agreement in respect of that Advance (but in any
      event not less than 50 per cent. of the interest rate risk at any time
      during the aforesaid period).

            

    

     

    
      	
              11.20

            	
              No amendment to Master
      Agreement;  Transactions.  The Borrower will
      not:

            

    

     

    
      
         

      

      
        32

        
          

        

      

      
         

      

    

    

     

    
      	
              (a)

            	
              agree
      to any amendment or supplement to, or waive or fail to enforce, the Master
      Agreement or any of its provisions;
or

            

    

     

    
      	
              (b)

            	
              enter
      into any Transaction pursuant to the Master Agreement except Designated
      Transactions.

            

    

     

    
      	
              12

            	
              CORPORATE
      UNDERTAKINGS

            

    

     

    
      	
              12.1

            	
              General.  The
      Borrower also undertakes with each Creditor Party to comply with the
      following provisions of this Clause 12 at all times during the Security
      Period except as the Agent may, with the authority of the Majority
      Lenders, otherwise permit.

            

    

     

    
      	
              12.2

            	
              Maintenance of
      status.  The Borrower will maintain its separate
      corporate existence and remain in good standing under the laws of the
      Marshall Islands.

            

    

     

    
      	
              12.3

            	
              Negative
      undertakings.  The Borrower will
  not:

            

    

     

    
      	
              (a)

            	
              change
      the nature of its business; or

            

    

     

    
      	
              (b)

            	
              declare
      or pay any dividend or effect any other form of distribution if at the
      relevant time an Event of Default has occurred or will occur from the
      declaration or payment of such dividend or the making of any other form of
      distribution; or

            

    

     

    
      	
              (c)

            	
              effect
      any form of redemption, purchase or return of share capital;
      or

            

    

     

    
      	
              (d)

            	
              provide
      any form of credit or financial assistance
to:

            

    

     

    
      	
               
      

            	
              (i)

            	
              a
      person who is directly or indirectly interested in the Borrower's share or
      loan capital; or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              any
      company in or with which such a person is directly or indirectly
      interested or connected;

            

    

     

    
      	
               
      

            	
              or
      enter into any transaction with or involving such a person or company on
      terms which are, in any respect, less favourable to the Borrower than
      those which it could obtain in a bargain made at arms'
      length  Provided that this shall
      not prevent or restrict the Borrower from on-lending the Loan to the
      Owners or granting credit or financial assistance to its wholly-owned
      direct or indirect subsidiaries;

            

    

     

    
      	
              (e)

            	
              issue,
      allot or grant any person a right to any shares in its capital or
      repurchase or reduce its issued share
capital;

            

    

     

    
      	
              (f)

            	
              acquire
      any shares or other securities other than US or UK Treasury bills and
      certificates of deposit issued by major North American or European banks
      or enter into any transaction in a derivative other than Designated
      Transactions;

            

    

     

    
      	
              (g)

            	
              enter
      into any form of amalgamation, merger or de-merger or any form of
      reconstruction or reorganisation.

            

    

     

    
      	
              12.4

            	
              Financial
      Covenants.  The Borrower shall ensure that at all
      times:

            

    

     

    
      	
              (a)

            	
              the
      ratio of  EBITDA to Interest Expenses shall not be less than
      2.5:1;

            

    

     

    
      	
              (b)

            	
              the
      Market Value Adjusted Net Worth of the Group shall not be less than
      $200,000,000 plus 100 per cent. of the net cash amount of all future
      equity offerings made by the
Borrower;

            

    

     

    
      
         

      

      
        33

        
          

        

      

      
         

      

    

    

     

    
      	
              (c)

            	
              there
      is available to the Borrower and all the other members of the Group an
      amount of not less than $500,000 per Fleet Vessel (excluding, for the
      avoidance of doubt, any amount standing to the credit of the Retention
      Account which has been transferred thereto in accordance with Clause 18.2
      or any other restricted account) in Liquid Assets of which, all amounts in
      respect of the Ships, shall be held in the Earnings
    Accounts;

            

    

     

    
      	
              (d)

            	
              the
      Leverage Ratio shall not exceed 0.65:1;
and

            

    

     

    
      	
              (e)

            	
              the
      Group shall maintain a positive Working Capital at all times of not less
      than $1,000,000.

            

    

     

    
      	
              12.5

            	
              Compliance
      Check.  Compliance with the undertakings contained in
      Clause 12.4 shall be determined in each Financial
  Year:

            

    

     

    
      	
              (a)

            	
              at
      the time the Agent receives the audited consolidated accounts of the Group
      and the unaudited consolidated accounts of the Group (pursuant to Clauses
      11.6(a) and 11.6(b) respectively), by reference to the unaudited
      consolidated accounts in the case of the first three financial quarters in
      each Financial Year and for the fourth financial quarter in each Financial
      Year, initially by reference to the unaudited consolidated accounts for
      the relevant fourth quarter and, once available, by reference to the
      audited consolidated accounts for that Financial Year of the Group;
      and

            

    

     

    
      	
              (b)

            	
              at
      any other time as the Agent may reasonably request by reference to such
      evidence as the Lenders may require to determine and calculate the
      financial covenants referred to in Clause
12.4.

            

    

     

    At
the same time as it delivers the consolidated accounts referred to in this
Clause 12.5, the Borrower shall deliver to the Agent a Compliance Certificate
demonstrating its compliance (or not, as the case may be) with the provisions of
Clause 12.4 signed by the chief financial officer of the Borrower.

     

    
      	
              12.6

            	
              Change in accounting
      expressions and policies.  If, by reason of change in
      format or GAAP or other relevant accounting policies, the expressions
      appearing in any accounts and financial statements referred to in Clause
      11.6 alter from those in the accounts and financial statements for the
      Borrower for the year ended 31 December 2006, the relevant definitions
      contained in Clause 1.1 and the provisions of Clause 12.4 shall be deemed
      modified in such manner as the Agent, acting with the authorisation of the
      Majority Lenders, shall require to take account of such different
      expressions but otherwise to maintain in all respects the substance of
      those provisions.

            

    

     

    
      	
              12.7

            	
              Subordination of rights of
      Borrower.  All rights which the Borrower at any time has
      (whether in respect of the Loan or any other transaction) against any
      Owner or its assets shall be fully subordinated to the rights of the
      Creditor Parties under the Finance Documents; and in particular, the
      Borrower shall not during the Security
Period:

            

    

     

    
      	
              (a)

            	
              claim,
      or in a bankruptcy of any Owner or prove for any amount payable to the
      Borrower by an Owner, whether in respect of the Loan or any other
      transaction;

            

    

     

    
      	
              (b)

            	
              take
      or enforce any Security Interest for any such amount;
  or

            

    

     

    
      	
              (c)

            	
              claim
      to set-off any such amount against any amount payable by the Borrower to
      any Owner.

            

    

     

    
      	
              13

            	
              INSURANCE

            

    

     

    
      	
              13.1

            	
              General.  The
      Borrower also undertakes with each Creditor Party to procure that each
      Owner will comply with the following provisions of this Clause 13 at all
      times during the

            

    

     

    
      
         

      

      
        34

        
          

        

      

      
         

      

    

    Security
Period (other than in the case of each Future Ship, in which case the provisions
of this Clause 13 shall apply to that Ship as from the date on which the Future
Ship which is owned or to be owned by that Owner is delivered to it under the
relevant MOA) except as the Agent may, with the authority of the Majority
Lenders, otherwise permit.

     

    
      	
              13.2

            	
              Maintenance of obligatory
      insurances.  The Borrower shall procure that each Owner
      keep the Ship owned by it insured at the expense of that Owner
      against:

            

    

     

    
      	
              (a)

            	
              fire
      and usual marine risks (including hull and machinery and excess
      risks);

            

    

     

    
      	
              (b)

            	
              war
      risks (including protection and indemnity war
  risks);

            

    

     

    
      	
              (c)

            	
              in
      the case of protection and indemnity war risks, in an amount equal to the
      amount for which the war risks under the hull policies are
      effected;

            

    

     

    
      	
              (d)

            	
              protection
      and indemnity risks including protection and indemnity war risks cover in
      excess of the amount for war risks (hull) and including cover for oil
      pollution liability risks; and

            

    

     

    
      	
              (e)

            	
              any
      other risks against which the Majority Lenders consider, having regard to
      practices and other circumstances prevailing at the relevant time, it
      would in the opinion of the Majority Lenders be reasonable for the
      relevant Owner to insure and which are specified by the Security Trustee
      by notice to the relevant Owner.

            

    

     

    
      	
              13.3

            	
              Terms of obligatory
      insurances.  The Borrower shall procure that each Owner
      shall effect such insurances:

            

    

     

    
      	
              (a)

            	
              in
      Dollars;

            

    

     

    
      	
              (b)

            	
              in
      the case of fire and usual marine risks and war risks, in an amount on an
      agreed value basis at least the greater of (i) an amount, which when
      aggregated with the insured value of the other Ships at the relevant time
      subject to a Mortgage, is equal to 120 per cent. of the Loan and (ii) the
      Market Value of the Ship owned by it;
and

            

    

     

    
      	
              (c)

            	
              in
      the case of oil pollution liability risks, for an aggregate amount equal
      to the highest level of cover from time to time available under basic
      protection and indemnity club entry (with the international group of
      protection and indemnity clubs) and the international marine insurance
      market (currently $1,000,000,000);

            

    

     

    
      	
              (d)

            	
              in
      relation to protection and indemnity risks, in respect of the full value
      and tonnage of the Ship owned by
it;

            

    

     

    
      	
              (e)

            	
              on
      approved terms; and

            

    

     

    
      	
              (f)

            	
              through
      approved brokers and with approved insurance companies and/or underwriters
      or, in the case of war risks and protection and indemnity risks, in
      approved war risks and protection and indemnity risks
      associations.

            

    

     

    
      	
              13.4

            	
              Further protections for the
      Creditor Parties.  In addition to the terms set out in
      Clause 13.3, the Borrower shall procure that the obligatory insurances
      shall:

            

    

     

    
      	
              (a)

            	
              name
      the Security Trustee as sole loss payee with such directions for payment
      as the Security Trustee may
specify;

            

    

     

    
      	
              (b)

            	
              provide
      that all payments by or on behalf of the insurers under the obligatory
      insurances to the Security Trustee shall be made without set-off,
      counterclaim or deductions or condition
  whatsoever;

            

    

     

    
      
         

      

      
        35

        
          

        

      

      
         

      

    

    

     

    
      	
              (c)

            	
              provide
      that the insurers shall waive, to the fullest extent permitted by English
      law, their entitlement (if any) (whether by statute, common law, equity,
      or otherwise) to be subrogated to the rights and remedies of the Security
      Trustee in respect of any rights or interests (secured or not) held by or
      available to the Security Trustee in respect of the Secured Liabilities,
      until the Secured Liabilities shall have been fully repaid and discharged,
      except that the insurers shall not be restricted by the terms of this
      paragraph (d) from making personal claims against persons (other than the
      relevant Owner or any Creditor Party) in circumstances where the insurers
      have fully discharged their liabilities and obligations under the relevant
      obligatory insurances;

            

    

     

    
      	
              (d)

            	
              provide
      that such obligatory insurances shall be primary without right of
      contribution from other insurances which may be carried by the Security
      Trustee;

            

    

     

    
      	
              (e)

            	
              provide
      that the Security Trustee may make proof of loss if the relevant Owner
      fails to do so;  and

            

    

     

    
      	
              (f)

            	
              provide
      that if any obligatory insurance is cancelled, or if any substantial
      change is made in the coverage which adversely affects the interest of the
      Security Trustee, or if any obligatory insurance is allowed to lapse for
      non-payment of premium, such cancellation, charge or lapse shall not be
      effective with respect to the Security Trustee for 30 days (or 7 days in
      the case of war risks) after receipt by the Security Trustee of prior
      written notice from the insurers of such cancellation, change or
      lapse.

            

    

     

    
      	
              13.5

            	
              Renewal of obligatory
      insurances.  The Borrower shall procure that each Owner
      shall:

            

    

     

    
      	
              (a)

            	
              at
      least 21 days before the expiry of any obligatory
    insurance:

            

    

     

    
      	
               
      

            	
              (i)

            	
              notify
      the Security Trustee of the brokers (or other insurers) and any protection
      and indemnity or war risks association through or with whom that Owner
      proposes to renew that insurance and of the proposed terms of renewal;
      and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              in
      case of any substantial change in insurance cover, obtain the Security
      Trustee’s approval to the matters referred to in paragraph (i)
      above;

            

    

     

    
      	
              (b)

            	
              at
      least 14 days before the expiry of any obligatory insurance, renew the
      insurance in accordance with the Security Trustee’s approval pursuant to
      paragraph (a); and

            

    

     

    
      	
              (c)

            	
              procure
      that the approved brokers and/or the war risks and protection and
      indemnity associations with which such a renewal is effected shall
      promptly after the renewal notify the Security Trustee in writing of the
      terms and conditions of the
renewal.

            

    

     

    
      	
              13.6

            	
              Copies of policies; letters of
      undertaking.  The Borrower shall procure that each Owner
      shall ensure that all approved brokers provide the Security Trustee with
      copies of all policies relating to the obligatory insurances which they
      effect or renew and of a letter or letters of undertaking (in the event of
      fleet cover, together with waivers for liens for unpaid premiums of other
      vessels not mortgaged to the Security Trustee) in a form required by the
      Security Trustee and including undertakings by the approved brokers
      that:

            

    

     

    
      	
              (a)

            	
              they
      will have endorsed on each policy, immediately upon issue, a loss payable
      clause and a notice of assignment complying with the provisions of Clause
      13.4;

            

    

     

    
      	
              (b)

            	
              they
      will hold such policies, and the benefit of such insurances, to the order
      of the Security Trustee in accordance with the said loss payable
      clause;

            

    

     

    
      	
              (c)

            	
              they
      will advise the Security Trustee immediately of any material change to the
      terms of the obligatory insurances;

            

    

     

    
      
         

      

      
        36

        
          

        

      

      
         

      

    

    

     

    
      	
              (d)

            	
              they
      will notify the Security Trustee, not less than 14 days before the expiry
      of the obligatory insurances, in the event of their not having received
      notice of renewal instructions from that Owner or its Agents and, in the
      event of their receiving instructions to renew, they will promptly notify
      the Security Trustee of the terms of the
  instructions;

            

    

     

    
      	
              (e)

            	
              they
      will notify the Security Trustee if any person other than the Owner is
      named as assured or co-assured in any of the obligatory insurances and
      shall procure that, upon the written request of the Security Trustee, such
      additional assured or co-assured executes in favour of the Security an
      assignment (in such form as the Lenders may approve or require) of its
      interest in the obligatory insurances;
and

            

    

     

    
      	
              (f)

            	
              they
      will not set off against any sum recoverable in respect of a claim
      relating to the Ship owned by the relevant Owner under such obligatory
      insurances any premiums or other amounts due to them or any other person
      whether in respect of that Ship or otherwise, they waive any lien on the
      policies or, any sums received under them, which they might have in
      respect of such premiums or other amounts, and they will not cancel such
      obligatory insurances by reason of non-payment of such premiums or other
      amounts, and will arrange for a separate policy to be issued in respect of
      the Ship forthwith upon being so requested by the Security
      Trustee.

            

    

     

    If
any of the obligatory insurances referred to in Clause 13.6 form part of a fleet
cover, the Borrower will procure that any letter of undertaking referred to in
this Clause is amended to provide that the relevant brokers shall undertake to
the Security Trustee that they shall neither set-off against any claims in
respect of a Ship any premiums due in respect of other vessels under such fleet
cover of any premiums due for other insurances, nor cancel the insurance for
reason of non-payment of premiums for other vessels under such fleet cover or of
premiums for such other insurances.

     

    
      	
              13.7

            	
              Copies of certificates of
      entry.  The Borrower shall procure that each Owner shall
      ensure that any protection and indemnity and/or war risks associations in
      which the Ship owned by that Owner is entered provides the Security
      Trustee with:

            

    

     

    
      	
              (a)

            	
              a
      certified copy of the certificate of entry for that
  Ship;

            

    

     

    
      	
              (b)

            	
              a
      letter or letters of undertaking in such form as may be required by the
      Security Trustee; and

            

    

     

    
      	
              (c)

            	
              where
      required to be issued under the terms of insurance/indemnity provided by
      the Borrower's protection and indemnity association, a certified copy of
      each United States of America voyage quarterly declaration (or other
      similar document or documents) made by that Owner in accordance with the
      requirements of such protection and indemnity association;
    and

            

    

     

    
      	
              (d)

            	
              a
      certified copy of each certificate of financial responsibility for
      pollution by oil or other Environmentally Sensitive Material issued by the
      relevant certifying authority.

            

    

     

    
      	
              13.8

            	
              Deposit of original
      policies.  The Borrower shall procure that each Owner
      shall ensure that all policies relating to obligatory insurances are
      deposited with the approved brokers through which the insurances are
      effected or renewed.

            

    

     

    
      	
              13.9

            	
              Payment of
      premiums.  The Borrower shall procure that each Owner
      shall punctually pay all premiums or other sums payable in respect of the
      obligatory insurances and produce all relevant receipts when so required
      by the Security Trustee.

            

    

     

    
      	
              13.10

            	
              Guarantees.  The
      Borrower shall procure that each Owner shall ensure that any guarantees
      required by a protection and indemnity or war risks association are
      promptly issued and remain in full force and
  effect.

            

    

     

    
      
         

      

      
        37

        
          

        

      

      
         

      

    

    

     

    
      	
              13.11

            	
              Restrictions on
      employment.  The Borrower shall procure that no Owner
      employ the Ship owned by it, nor permit her to be employed, outside the
      cover provided by any obligatory
insurances.

            

    

     

    
      	
              13.12

            	
              Compliance with terms of
      insurances.  The Borrower shall procure that no Owner
      shall do or omit to do (or permit to be done or not to be done) any act or
      thing which would or might render any obligatory insurance invalid, void,
      voidable or unenforceable or render any sum payable thereunder repayable
      in whole or in part; and, in
particular:

            

    

     

    
      	
              (a)

            	
              each
      Owner shall take all necessary action and comply with all requirements
      which may from time to time be applicable to the obligatory insurances,
      and (without limiting the obligation contained in Clause 13.7(c) above)
      ensure that the obligatory insurances are not made subject to any
      exclusions or qualifications to which the Security Trustee has not given
      its prior approval;

            

    

     

    
      	
              (b)

            	
              no
      Owner shall make any changes relating to the classification or
      classification society or manager or operator of the Ship owned by it
      unless approved by the underwriters of the obligatory
      insurances;

            

    

     

    
      	
              (c)

            	
              each
      Owner shall make all quarterly or other voyage declarations which may be
      required by the protection and indemnity risks association in which the
      Ship owned by it is entered to maintain cover for trading to the United
      States of America and Exclusive Economic Zone (as defined in the United
      States Oil Pollution Act 1990 or any other applicable legislation);
      and

            

    

     

    
      	
              (d)

            	
              no
      Owner shall employ the Ship owned by it, nor allow it to be employed,
      otherwise than in conformity with the terms and conditions of the
      obligatory insurances, without first obtaining the consent of the insurers
      and complying with any requirements (as to extra premium or otherwise)
      which the insurers specify.

            

    

     

    
      	
              13.13

            	
              Alteration to terms of
      insurances.  The Borrower shall procure that no Owner
      shall either make or agree to any alteration to the terms of any
      obligatory insurance or waive any right relating to any obligatory
      insurance without the prior written consent of the Security
      Trustee.

            

    

     

    
      	
              13.14

            	
              Settlement of
      claims.  The Borrower shall procure that no Owner shall
      settle, compromise or abandon any claim under any obligatory insurance for
      Total Loss or for a Major Casualty, and shall do all things necessary and
      provide all documents, evidence and information to enable the Security
      Trustee to collect or recover any moneys which at any time become payable
      in respect of the obligatory
insurances.

            

    

     

    
      	
              13.15

            	
              Provision of copies of
      communications.  The Borrower shall procure that each
      Owner shall provide the Security Trustee, at the time of each such
      communication, copies of all written communications between that Owner
      and:

            

    

     

    
      	
              (a)

            	
              the
      approved brokers; and

            

    

     

    
      	
              (b)

            	
              the
      approved protection and indemnity and/or war risks associations;
      and

            

    

     

    
      	
              (c)

            	
              the
      approved insurance companies and/or underwriters, which relate directly or
      indirectly to:

            

    

     

    
      	
               
      

            	
              (i)

            	
              that
      Owner’s obligations relating to the obligatory insurances including,
      without limitation, all requisite declarations and payments of additional
      premiums or calls; and

            

    

     

    
      
         

      

      
        38

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

            	
              (ii)

            	
              any
      credit arrangements made between that Owner and any of the persons
      referred to in paragraphs (a) or (b) above relating wholly or partly to
      the effecting or maintenance of the obligatory
  insurances.

            

    

     

    
      	
              13.16

            	
              Provision of
      information.  In addition, the Borrower shall procure
      that each Owner shall promptly provide the Security Trustee (or any
      persons which it may designate) with any information which the Security
      Trustee (or any such designated person) requests for the purpose
      of:

            

    

     

    
      	
              (a)

            	
              obtaining
      or preparing any report from an independent marine insurance broker as to
      the adequacy of the obligatory insurances effected or proposed to be
      effected; and/or

            

    

     

    
      	
              (b)

            	
              effecting,
      maintaining or renewing any such insurances as are referred to in Clause
      13.17 below or dealing with or considering any matters relating to any
      such insurances

            

    

     

    
      	
               
      

            	
              and
      the Borrower shall, forthwith upon demand, indemnify the Security Trustee
      in respect of all fees and other expenses incurred by or for the account
      of the Security Trustee in connection with any such report as is referred
      to in paragraph (a) above.

            

    

     

    
      	
              13.17

            	
              Mortgagee's interest and
      additional peril insurances.  The Security Trustee shall
      be entitled from time to time to effect, maintain and renew all or any of
      the following insurances in such amounts, on such terms, through such
      insurers and generally in such manner as the Security Trustee may from
      time to time consider appropriate:

            

    

     

    
      	
              (a)

            	
              a
      mortgagee's interest insurance in an amount equal to 120 per cent. of the
      Loan;

            

    

     

    
      	
              (b)

            	
              a
      mortgagee's interest additional perils (pollution) insurance in an amount
      equal to 120 per cent. of the Loan.

            

    

     

    
      	
               
      

            	
              and
      the Borrower shall upon demand fully indemnify the Security Trustee in
      respect of all premiums and other expenses which are incurred in
      connection with or with a view to effecting, maintaining or renewing any
      such insurance or dealing with, or considering, any matter arising out of
      any such insurance.

            

    

     

    
      	
              13.18

            	
              Review of insurance
      requirements.  The Majority Lenders shall be entitled to
      review the requirements of this Clause 13 from time to time in order to
      take account of any changes in circumstances after the date of this
      Agreement which are, in the opinion of the Majority Lenders, significant
      and capable of affecting the Owners or the Ships and their insurance
      (including, without limitation, changes in the availability or the cost of
      insurance coverage or the risks to which the Owners may be subject), and
      may appoint insurance consultants in relation to this review at the cost
      of the Borrower.

            

    

     

    
      	
              13.19

            	
              Modification of insurance
      requirements.  The Security Trustee shall notify the
      Borrower of any proposed modification under Clause 13.18 to the
      requirements of this Clause 13 which the Majority Lenders consider
      appropriate in the circumstances, and such modification shall take effect
      on and from the date it is notified in writing to the Borrower as an
      amendment to this Clause 13 and shall bind the Borrower
      accordingly.

            

    

     

    
      	
              13.20

            	
              Compliance with mortgagee's
      instructions.  The Security Trustee shall be entitled
      (without prejudice to or limitation of any other rights which it may have
      or acquire under any Finance Document) to require any Ship to remain at
      any safe port or to proceed to and remain at any safe port designated by
      the Security Trustee until the Owner of that Ship implements any
      amendments to the terms of the obligatory insurances and any operational
      changes required as a result of a notice served under Clause
      13.19.

            

    

     

    
      
         

      

      
        39

        
          

        

      

      
         

      

    

    

     

    
      	
              14

            	
              SHIP
      COVENANTS

            

    

     

    
      	
              14.1

            	
              General.  The
      Borrower also undertakes with each Creditor Party to procure that each
      Owner shall comply with the following provisions of this Clause 14 at all
      times during the Security Period (other than in the case of each Future
      Ship, in which case the provisions of this Clause 14 shall apply to that
      Ship as from the date on which the Future Ship which is owned or to be
      owned by that Owner is delivered to it under the relevant MOA) except as
      the Agent, with the authority of the Majority Lenders, may otherwise
      permit.

            

    

     

    
      	
              14.2

            	
              Ship's name and
      registration.  The Borrower shall procure that each Owner
      shall keep the Ship owned by it registered in its ownership under an
      Approved Flag; shall not do or allow to be done anything as a result of
      which such registration might be cancelled or imperilled; and shall not
      change the name or port of registry of any
Ship.

            

    

     

    
      	
              14.3

            	
              Repair and
      classification.  The Borrower shall procure that each
      Owner shall keep the Ship owned by it in a good and safe condition and
      state of repair:

            

    

     

    
      	
              (a)

            	
              consistent
      with first-class ship ownership and management
  practice;

            

    

     

    
      	
              (b)

            	
              so
      as to maintain the highest class with a first-class classification society
      which is a member of IACS acceptable to the Agent free of overdue
      recommendations and conditions of such classification society;
      and

            

    

     

    
      	
              (c)

            	
              so
      as to comply with all laws and regulations applicable to vessels
      registered at ports in the relevant Approved Flag State or to vessels
      trading to any jurisdiction to which the Ship may trade from time to time,
      including but not limited to the ISM Code, the ISPS Code, the ISM Code
      Documentation and the ISPS Code
Documentation.

            

    

     

    
      	
              14.4

            	
              Classification society
      undertaking.  The Borrower shall procure that each Owner
      shall instruct the classification society referred to in Clause 14.3 (and
      procure that the classification society undertakes with the Security
      Trustee):

            

    

     

    
      	
              (a)

            	
              to
      send to the Security Trustee, following receipt of a written request from
      the Security Trustee, certified true copies of all original class records
      and any other related records held by the classification society in
      relation to the Ship owned by that
Owner;

            

    

     

    
      	
              (b)

            	
              to
      allow the Security Trustee (or its agents), at any time and from time to
      time, to inspect the original class and related records of that Owner and
      its Ship at the offices of the classification society and to take copies
      of them;

            

    

     

    
      	
              (c)

            	
              to
      notify the Security Trustee immediately in writing if the classification
      society:

            

    

     

    
      	
               
      

            	
              (i)

            	
              receives
      notification from the Owner or any person that the Ship's classification
      society is to be
changed;  or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              becomes
      aware of any facts or matters which may result in or have resulted in a
      change, suspension, discontinuance, withdrawal or expiry of the Ship's
      class under the rules or terms and conditions of the Owner’s or the Ship's
      membership of the classification
society;

            

    

     

    
      	
              (d)

            	
              following
      receipt of a written request from the Security
  Trustee:

            

    

     

    
      	
               
      

            	
              (i)

            	
              to
      confirm that the Owner is not in default of any of its contractual
      obligations or liabilities to the classification society and, without
      limiting the foregoing, that it has paid in full all fees or other charges
      due and payable to the classification
    society;  or

            

    

     

    
      
         

      

      
        40

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

            	
              (ii)

            	
              if
      the Owner is in default of any of its contractual obligations or
      liabilities to the classification society, to specify to the Security
      Trustee in reasonable detail the facts and circumstances of such default,
      the consequences thereof, and any remedy period agreed or allowed by the
      classification society.

            

    

     

    
      	
              14.5

            	
              Modification.  The
      Borrower shall procure that no Owner shall make any modification or
      repairs to, or replacement of, the Ship owned by it or equipment installed
      on her which would or might materially (in the sole opinion of the Agent)
      alter the structure, type or performance characteristics of the Ship or
      materially reduce her value.

            

    

     

    
      	
              14.6

            	
              Removal of
      parts.  The Borrower shall procure that no Owner shall
      remove any material part of the Ship owned by it, or any item of equipment
      installed on, the Ship unless the part or item so removed is forthwith
      replaced by a suitable part or item which is in the same condition as or
      better condition than the part or item removed, is free from any Security
      Interest or any right in favour of any person other than the Security
      Trustee and becomes on installation on the Ship the property of the Owner
      and subject to the security constituted by the Mortgage and if applicable,
      the Deed of Covenant, relative to the Ship Provided that the Owner
      may install equipment owned by a third party if the equipment can be
      removed without any risk of damage to the
Ship.

            

    

     

    
      	
              14.7

            	
              Surveys.  The
      Borrower shall procure that each Owner shall submit the Ship owned by it
      regularly to all periodical or other surveys which may be required for
      classification purposes and, if so required by the Majority Lenders,
      provide the Security Trustee (at the expense of the Borrower) with copies
      of all survey reports.

            

    

     

    
      	
              14.8

            	
              Inspection.  The
      Borrower shall procure that each Owner shall permit the Security Trustee
      (by surveyors or other persons appointed by it for that purpose) to board
      the Ship owned by it at all reasonable times to inspect her condition or
      to satisfy themselves about proposed or executed repairs and shall afford
      all proper facilities for such inspections Provided that so long as
      no Event of Default has occurred and is continuing at the relevant time
      and a Ship is found to be in a satisfactory condition (in the opinion of
      the Security Trustee) the Borrower shall be obliged to pay the fees and
      expenses of one inspection of that Ship in any calendar
    year.

            

    

     

    
      	
              14.9

            	
              Prevention of and release from
      arrest.  The Borrower shall procure that each Owner shall
      promptly discharge:

            

    

     

    
      	
              (a)

            	
              all
      liabilities which give or may give rise to maritime or possessory liens on
      or claims enforceable against the Ship owned by it, her Earnings or her
      Insurances;

            

    

     

    
      	
              (b)

            	
              all
      taxes, dues and other amounts charged in respect of the Ship, her Earnings
      or her Insurances; and

            

    

     

    
      	
              (c)

            	
              all
      other outgoings whatsoever in respect of the Ship, her Earnings or her
      Insurances

            

    

     

    
      	
               
      

            	
              and,
      forthwith upon receiving notice of the arrest of the Ship, or of her
      detention in exercise or purported exercise of any lien or claim, the
      relevant Owner shall within 7 days of the arrest or detention procure her
      release by providing bail or otherwise as the circumstances may
      require.

            

    

     

    
      	
              14.10

            	
              Compliance with laws
      etc.  The Borrower shall procure that each Owner and the
      Approved Manager shall:

            

    

     

    
      	
              (a)

            	
              comply,
      or procure compliance with the ISM Code, the ISPS Code, all Environmental
      Laws and all other laws or regulations relating to the Ship owned by the
      relevant Owner, its ownership, operation and management or to the business
      of that Owner;

            

    

     

    
      
         

      

      
        41

        
          

        

      

      
         

      

    

    

     

    
      	
              (b)

            	
              not
      employ the Ship nor allow her employment in any manner contrary to any law
      or regulation in any relevant jurisdiction including but not limited to
      the ISM Code and the ISPS Code; and

            

    

     

    
      	
              (c)

            	
              in
      the event of hostilities in any part of the world (whether war is declared
      or not), not cause or permit the Ship to enter or trade to any zone which
      is declared a war zone by any government or by the Ship's war risks
      insurers unless the prior written consent of the Majority Lenders has been
      given and the Owner has (at its expense) effected any special, additional
      or modified insurance cover which the Majority Lenders may
      require.

            

    

     

    
      	
              14.11

            	
              Provision of
      information.  The Borrower shall procure that each Owner
      shall promptly provide the Security Trustee with any information which the
      Majority Lenders request regarding:

            

    

     

    
      	
              (a)

            	
              the
      Ship owned by it, her employment, position and
  engagements;

            

    

     

    
      	
              (b)

            	
              the
      Earnings and payments and amounts due to the master and crew of the Ship
      owned by it;

            

    

     

    
      	
              (c)

            	
              any
      expenses incurred, or likely to be incurred, in connection with the
      operation, maintenance or repair of the Ship owned by it and any payments
      made in respect of that Ship;

            

    

     

    
      	
              (d)

            	
              any
      towages and salvages;

            

    

     

    
      	
              (e)

            	
              its
      compliance or the compliance of the Ship owned by it with the ISM Code and
      the ISPS Code,

            

    

     

    
      	
               
      

            	
              and,
      upon the Security Trustee's request, provide copies of any current charter
      relating to the Ship and of any current charter guarantee, and copies of
      the ISM Code Documentation and the ISPS Code
  Documentation.

            

    

     

    
      	
              14.12

            	
              Notification of certain
      events.  The Borrower shall procure that each Owner shall
      immediately notify the Security Trustee by letter
  of:

            

    

     

    
      	
              (a)

            	
              any
      casualty which is or is likely to be or to become a Major
      Casualty;

            

    

     

    
      	
              (b)

            	
              any
      occurrence as a result of which the Ship owned by it has become or is, by
      the passing of time or otherwise, likely to become a Total
      Loss;

            

    

     

    
      	
              (c)

            	
              any
      requirement or recommendation made by any insurer or classification
      society or by any competent authority which is not immediately complied
      with;

            

    

     

    
      	
              (d)

            	
              any
      arrest or detention of the Ship owned by it, any exercise or purported
      exercise of any lien on that Ship or her Earnings or any requisition of
      that Ship for hire;

            

    

     

    
      	
              (e)

            	
              any
      intended dry docking of the Ship;

            

    

     

    
      	
              (f)

            	
              any
      Environmental Claim made against that Owner or in connection with the Ship
      owned by it, or any Environmental
Incident;

            

    

     

    
      	
              (g)

            	
              any
      claim for breach of the ISM Code or the ISPS Code being made against the
      Owner, the Approved Manager or otherwise in connection with the Ship owned
      by it; or

            

    

     

    
      	
              (h)

            	
              any
      other matter, event or incident, actual or threatened, the effect of which
      will or could lead to the ISM Code or the ISPS Code not being complied
      with

            

    

     

    
      
         

      

      
        42

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

            	
              and
      the Borrower shall keep the Security Trustee advised in writing on a
      regular basis and in such detail as the Security Trustee shall require of
      the Owner’s, the Approved Manager’s  or any other person's
      response to any of those events or
matters.

            

    

     

    
      	
              14.13

            	
              Restrictions on chartering,
      appointment of managers etc.  The Borrower shall procure
      that no Owner shall:

            

    

     

    
      	
              (a)

            	
              change
      the terms on which the Ship is employed or the identity of the person by
      whom the Ship is employed;

            

    

     

    
      	
              (b)

            	
              enter
      into any charter in relation to the Ship under which more than 2 months'
      hire (or the equivalent) is payable in
advance;

            

    

     

    
      	
              (c)

            	
              charter
      the Ship otherwise than on bona fide arm's length terms at the time when
      the Ship is fixed;

            

    

     

    
      	
              (d)

            	
              appoint
      a manager of the Ship other than the Approved Manager or agree to any
      alteration to the terms of the Approved Manager’s
      appointment  Provided that the Agent
      (acting upon the instructions of all the Lenders) may require the
      Borrowers to replace the Approved Manager (and the Borrowers hereby agree
      to promptly comply with such instruction) if the Lenders are not satisfied
      with the performance of the Approved
Manager;

            

    

     

    
      	
              (e)

            	
              de-activate
      or lay up the Ship; or

            

    

     

    
      	
              (f)

            	
              put
      the Ship into the possession of any person for the purpose of work being
      done upon her in an amount exceeding or likely to exceed $500,000 (or the
      equivalent in any other currency) unless that person has first given to
      the Security Trustee and in terms satisfactory to it a written undertaking
      not to exercise any lien on the Ship or her Earnings for the cost of such
      work or otherwise.

            

    

     

    
      	
              14.14

            	
              Notice of
      Mortgage.  The Borrower shall procure that each Owner
      shall keep the Mortgage applicable to the Ship owned by it registered
      against that Ship as a valid first priority or first preferred mortgage,
      carry on board that Ship a certified copy of the Mortgage and place and
      maintain in a conspicuous place in the navigation room and the Master's
      cabin of that Ship a framed printed notice stating that that Ship is
      mortgaged by the relevant Owner to the Security
  Trustee.

            

    

     

    
      	
              14.15

            	
              Sharing of
      Earnings.  The Borrower shall procure that no Owner
      shall:

            

    

     

    
      	
              (a)

            	
              enter
      into any agreement or arrangement for the sharing of any
      Earnings;

            

    

     

    
      	
              (b)

            	
              enter
      into any agreement or arrangement for the postponement of any date on
      which any Earnings are due; the reduction of the amount of any Earnings or
      otherwise for the release or adverse alteration of any right of that Owner
      to any Earnings; or

            

    

     

    
      	
              (c)

            	
              enter
      into any agreement or arrangement for the release of, or adverse
      alteration to, any guarantee or Security Interest relating to any
      Earnings.

            

    

     

    
      	
              14.16

            	
              Charterparty
      Assignment.  If any Owner enters into any bareboat
      charter or any time charterparty or other contract of employment for a
      term which exceeds or is capable of exceeding 12 months in respect of its
      Ship that Owner shall, at the request of the Agent, execute, or, as the
      case may be, procure the execution in favour of the Security Trustee of a
      Charterparty Assignment in respect of that charter or other contract of
      employment, and shall deliver to the Agent such other documents equivalent
      to those referred to at paragraphs 3, 4 and 5 of Schedule 4, Part A as the
      Agent may require.

            

    

     

    
      
         

      

      
        43

        
          

        

      

      
         

      

    

    

     

    
      	
              15

            	
              SECURITY
      COVER

            

    

     

    
      	
              15.1

            	
              Provision of additional
      security cover; prepayment of Loan.  The Borrower
      undertakes with each Creditor Party that if the Agent notifies the
      Borrower that:

            

    

     

    
      	
              (a)

            	
              the
      aggregate Market Value of the Ships subject to a Mortgage;
      plus

            

    

     

    
      	
              (b)

            	
              the
      net realisable value of any additional security previously provided under
      this Clause 15;

            

    

     

    
      	
               
      

            	
              is
      below 140 per cent. of the Loan, the Borrower will on the first Business
      Day after the date on which the Agent's notice is served prepay in
      accordance with Clause 8 such part (at least) of the Loan as will
      eliminate the shortfall.

            

    

     

    If
the Borrower satisfies the Majority Lenders that it is unable to make the
prepayment of the Loan required pursuant to this Clause 15.1, the Agent (acting
upon the instructions of the Majority Lenders) may (in its sole and absolute
discretion) agree instead to accept within 14 days after the date on which its
notice is served, additional security from the Borrower or a third party which,
in the opinion of the Majority Lenders, has a net realisable value at least
equal to the shortfall and which, if it consists of or includes a Security
Interest, covers such asset or assets and is documented in such terms as the
Agent may, with authorisation from the Majority Lenders, approve or
require.

     

    
      	
              15.2

            	
              Meaning of additional
      security.  In Clause 15.1 “security” means a
      Security Interest over an asset or assets (including, without limitation a
      vessel (other than a Ship)) (whether securing the Borrower’s liabilities
      under the Finance Documents or a guarantee in respect of those
      liabilities), or a guarantee, letter of credit, cash deposit or other
      security acceptable to the Majority Lenders (in their sole and absolute
      discretion) in respect of the Borrower’s liabilities under the Finance
      Documents.

            

    

     

    
      	
              15.3

            	
              Requirement for additional
      documents.  The Borrower shall not be deemed to have
      complied with Clause 15.1 above until the Agent has received in connection
      with the additional security certified copies of documents of the kinds
      referred to in paragraphs 3, 4 and 5 of Schedule 5, Part A and such legal
      opinions in terms acceptable to the Majority Lenders from such lawyers as
      they may select.

            

    

     

    
      	
              15.4

            	
              Valuation of
      Ship.  The market value of a Ship at any date is that
      shown by taking the arithmetic mean of two valuations each
      prepared:

            

    

     

    
      	
              (a)

            	
              as
      at a date not more than 30 days
previously;

            

    

     

    
      	
              (b)

            	
              in
      the case of the first valuation, by an Approved Broker appointed by the
      Borrower and, in the case of the second valuation, by an Approved Broker
      appointed by the Agent;

            

    

     

    
      	
              (c)

            	
              with
      or without physical inspection of the Ship (as the Agent may
      require);

            

    

     

    
      	
              (d)

            	
              on
      the basis of a sale for prompt delivery for cash on normal arm's length
      commercial terms as between a willing seller and a willing buyer, free of
      any existing charter or other contract of employment;
  and

            

    

     

    
      	
              (e)

            	
              after
      deducting the estimated amount of the usual and reasonable expenses which
      would be incurred in connection with the
sale,

            

    

     

    Provided that  if
the two valuations provided pursuant to this Clause 15.4 differ by more than 15
per cent., a third valuation shall be obtained from a third Approved Broker
appointed by the Agent and prepared on the basis described in paragraphs (a),
(c), (d) and (e) of this Clause 15.4 and the Market Value of the relevant Ship
which is the subject of

     

    
      
         

      

      
        44

        
          

        

      

      
         

      

    

    the
third valuation shall be the arithmetic mean of the three valuations obtained
pursuant to this Clause 15.4.

     

    
      	
              15.5

            	
              Value of additional
      security.  The net realisable value of any additional
      security which is provided under Clause 15.1 and which consists of a
      Security Interest over a vessel shall be that shown by a valuation
      complying with the requirements of Clause
15.4.

            

    

     

    
      	
              15.6

            	
              Valuations
      binding.  Any valuation under Clause 15.1(i), 15.4 or
      15.5 shall be binding and conclusive as regards the Borrower, as shall be
      any valuation which the Majority Lenders make of a security which does not
      consist of or include a Security
Interest.

            

    

     

    
      	
              15.7

            	
              Provision of
      information.  The Borrower shall promptly provide the
      Agent and any Approved Broker or expert acting under Clause 15.4 or 15.5
      with any information which the Agent or the Approved Broker or expert may
      request for the purposes of the valuation; and, if the Borrower fails to
      provide the information by the date specified in the request, the
      valuation may be made on any basis and assumptions which the Approved
      Broker or the Majority Lenders (or the expert appointed by them) consider
      prudent.

            

    

     

    
      	
              15.8

            	
              Payment of valuation
      expenses.  Without prejudice to the generality of the
      Borrower’s obligations under Clauses 20.2, 20.3 and 21.3, the Borrower
      shall, on demand, pay the Agent the amount of the fees and expenses of any
      Approved Broker instructed by the Agent under this
  Clause.

            

    

     

    
      	
              16

            	
              PAYMENTS
      AND CALCULATIONS

            

    

     

    
      	
              16.1

            	
              Currency and method of
      payments.  All payments to be
  made:

            

    

     

    
      	
              (a)

            	
              by
      the Lenders to the Agent; or

            

    

     

    
      	
              (b)

            	
              by
      the Borrower to the Agent, the Security Trustee or any
    Lender

            

    

     

    
      	
               
      

            	
              under
      a Finance Document shall be made to the Agent or to the Security Trustee,
      in the case of an amount payable to
it:

            

    

     

    
      	
               
      

            	
              (i)

            	
              by
      not later than 11.00 a.m. (New York City time) on the due
      date;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              in
      same day Dollar funds settled through the New York Clearing House
      Interbank Payments System (or in such other Dollar funds and/or settled in
      such other manner as the Agent shall specify as being customary at the
      time for the settlement of international transactions of the type
      contemplated by this Agreement);

            

    

     

    
      	
               
      

            	
              (iii)

            	
              to
      such account of the Agent as the Agent may from time to time notify the
      Borrower; and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              in
      the case of an amount payable to the Security Trustee, to such account as
      it may from time to time notify to the Borrower and the other Creditor
      Parties.

            

    

     

    
      	
              16.2

            	
              Payment on non-Business
      Day.  If any payment by the Borrower under a Finance
      Document would otherwise fall due on a day which is not a Business
      Day:

            

    

     

    
      	
              (a)

            	
              the
      due date shall be extended to the next succeeding Business Day;
      or

            

    

     

    
      	
              (b)

            	
              if
      the next succeeding Business Day falls in the next calendar month, the due
      date shall be brought forward to the immediately preceding Business
      Day

            

    

     

    and
interest shall be payable during any extension under paragraph (a) at the rate
payable on the original due date.

    
      
         

      

      
        45

        
          

        

      

      
         

      

    

    

    

    
      	
              16.3

            	
              Basis for calculation of
      periodic payments.  All interest and commitment fee and
      any other payments under any Finance Document which are of an annual or
      periodic nature shall accrue from day to day and shall be calculated on
      the basis of the actual number of days elapsed and a 360 day
      year.

            

    

     

    
      	
              16.4

            	
              Distribution of payments to
      Creditor Parties.  Subject to Clauses 16.5, 16.6 and
      16.7:

            

    

     

    
      	
              (a)

            	
              any
      amount received by the Agent under a Finance Document for distribution or
      remittance to a Lender, the Swap Bank or the Security Trustee shall be
      made available by the Agent to that Lender or, as the case may be, the
      Swap Bank or the Security Trustee by payment, with funds having the same
      value as the funds received, to such account as the Lender, the Swap Bank
      or the Security Trustee may have notified to the Agent not less than 5
      Business Days previously; and

            

    

     

    
      	
              (b)

            	
              amounts
      to be applied in satisfying amounts of a particular category which are due
      to the Lenders or the Swap Bank generally shall be distributed by the
      Agent to each Lender or the Swap Bank pro rata to the amount in that
      category which is due to it.

            

    

     

    
      	
              16.5

            	
              Permitted deductions by
      Agent.  Notwithstanding any other provision of this
      Agreement or any other Finance Document, the Agent may, before making an
      amount available to a Lender or the Swap Bank, deduct and withhold from
      that amount any sum which is then due and payable to the Agent from that
      Lender or the Swap Bank under any Finance Document or any sum which the
      Agent is then entitled under any Finance Document to require that Lender
      or the Swap Bank to pay on demand.

            

    

     

    
      	
              16.6

            	
              Agent only obliged to pay when
      monies received.  Notwithstanding any other provision of
      this Agreement or any other Finance Document, the Agent shall not be
      obliged to make available to the Borrower or any Lender or the Swap Bank
      any sum which the Agent is expecting to receive for remittance or
      distribution to the Borrower or that Lender or the Swap Bank until the
      Agent has satisfied itself that it has received that
  sum.

            

    

     

    
      	
              16.7

            	
              Refund to Agent of monies not
      received.  If and to the extent that the Agent makes
      available a sum to the Borrower or a Lender or the Swap Bank, without
      first having received that sum, the Borrower or (as the case may be) the
      Lender or the Swap Bank concerned shall, on
  demand:

            

    

     

    
      	
              (a)

            	
              refund
      the sum in full to the Agent; and

            

    

     

    
      	
              (b)

            	
              pay
      to the Agent the amount (as certified by the Agent) which will indemnify
      the Agent against any funding or other loss, liability or expense incurred
      by the Agent as a result of making the sum available before receiving
      it.

            

    

     

    
      	
              16.8

            	
              Agent may assume
      receipt.  Clause 16.7 shall not affect any claim which
      the Agent has under the law of restitution, and applies irrespective of
      whether the Agent had any form of notice that it had not received the sum
      which it made available.

            

    

     

    
      	
              16.9

            	
              Creditor Party
      accounts.  Each Creditor Party shall maintain accounts
      showing the amounts owing to it by the Borrower and each Security Party
      under the Finance Documents and all payments in respect of those amounts
      made by the Borrower and any Security
Party.

            

    

     

    
      	
              16.10

            	
              Agent's memorandum
      account.  The Agent shall maintain a memorandum account
      showing the amounts advanced by the Lenders and all other sums owing to
      the Agent, the Security Trustee and each Lender from the Borrower and each
      Security Party under the Finance Documents and all payments in respect of
      those amounts made by the Borrower and any Security
  Party.

            

    

     

    
      
         

      

      
        46

        
          

        

      

      
         

      

    

    

     

    
      	
              16.11

            	
              Accounts prima facie
      evidence.  If any accounts maintained under Clauses 16.9
      and 16.10 show an amount to be owing by the Borrower or a Security Party
      to a Creditor Party, those accounts shall, absent manifest error, be prima
      facie evidence that that amount is owing to that Creditor
      Party.

            

    

     

    
      	
              17

            	
              APPLICATION
      OF RECEIPTS

            

    

     

    
      	
              17.1

            	
              Normal order of
      application.  Except as any Finance Document may
      otherwise provide, any sums which are received or recovered by any
      Creditor Party under or by virtue of any Finance Document shall be
      applied:

            

    

     

    
      	
              (a)

            	
              FIRST:
      in or towards satisfaction of any amounts then due and payable under the
      Finance Documents and the Master Agreement in the following order and
      proportions:

            

    

     

    
      	
               
      

            	
              (i)

            	
              first,
      in or towards satisfaction pro rata of all amounts then due and payable to
      the Creditor Parties under the Finance Documents other than those amounts
      referred to at paragraphs (ii) and (iii) (including, but without
      limitation, all amounts payable by the Borrower under Clauses 20, 21 and
      22 of this Agreement or by the Borrower or any Security Party under any
      corresponding or similar provision in any other Finance Document or in the
      Master Agreement);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              secondly,
      in or towards satisfaction pro rata of any and all amounts of interest or
      default interest payable to the Creditor Parties under the Finance
      Documents  and the Master Agreement (and, for this purpose, the
      expression “interest” shall include
      any net amount which the Borrower shall have become liable to pay or
      deliver under section 2(e) (Obligations) of the Master Agreement but shall
      have failed to pay or deliver to the relevant Swap Bank at the time of
      application or distribution under this Clause 17);
  and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              thirdly,
      in or towards satisfaction pro rata of the Loan and the Swap Exposure of
      the Swap Bank (in the case of the latter, calculated as at the actual
      Early Termination Date applying to each particular Designated Transaction,
      or if no such Early Termination Date shall have occurred, calculated as if
      an Early Termination Date occurred on the date of application or
      distribution hereunder);

            

    

     

    
      	
              (b)

            	
              SECONDLY:
      in retention of an amount equal to any amount not then due and payable
      under any Finance Document or the Master Agreement but which the Agent, by
      notice to the Borrower, the Security Parties and the other Creditor
      Parties, states in its opinion will or may become due and payable in the
      future and, upon those amounts becoming due and payable, in or towards
      satisfaction of them in accordance with the provisions of Clause 17.1(a);
      and

            

    

     

    
      	
              (c)

            	
              THIRDLY:
      any surplus shall be paid to the Borrower or to any other person appearing
      to be entitled to it.

            

    

     

    
      	
              17.2

            	
              Variation of order of
      application.  The Agent may, with the authorisation of
      the Majority Lenders and the Swap Bank by notice to the Borrower, the
      Security Parties and the other Creditor Parties provide for a different
      manner of application from that set out in Clause 17.1 either as regards a
      specified sum or sums or as regards sums in a specified category or
      categories.

            

    

     

    
      	
              17.3

            	
              Notice of variation of order of
      application.  The Agent may give notices under Clause
      17.2 from time to time; and such a notice may be stated to apply not only
      to sums which may be received or recovered in the future, but also to any
      sum which has been received or recovered on or after the third Business
      Day before the date on which the notice is
  served.

            

    

     

    
      
         

      

      
        47

        
          

        

      

      
         

      

    

    

     

    
      	
              17.4

            	
              Appropriation rights
      overridden.  This Clause 17 and any notice which the
      Agent gives under Clause 17.3 shall override any right of appropriation
      possessed, and any appropriation made, by the Borrower or any Security
      Party.

            

    

     

    
      	
              18

            	
              APPLICATION
      OF EARNINGS

            

    

     

    
      	
              18.1

            	
              Payment of
      Earnings.  The Borrower undertakes with each Creditor
      Party to ensure that throughout the Security Period (subject only to
      provisions of the relevant General Assignment), all the Earnings of each
      Ship are paid to the Earnings Account for that
  Ship.

            

    

     

    
      	
              18.2

            	
              Transfers to Retention
      Account.  The Borrower undertakes with each Creditor
      Party to ensure that in each calendar month of the Security Period
      commencing on the date falling 1 month after the first Drawdown Date and
      on the same day in each subsequent month, there is transferred to the
      Retention Account out of the aggregate Earnings received in the Earnings
      Accounts during the preceding calendar
month:

            

    

     

    
      	
              (a)

            	
              one-third
      of the amount of each reduction which is required to be made pursuant to
      Clause 8.1(a) on the next Reduction
Date;

            

    

     

    
      	
              (b)

            	
              the
      relevant fraction of the amount of interest on the Loan which is payable
      on the next due date for payment of interest for the Loan under this
      Agreement.

            

    

     

    The
“relevant fraction” in
paragraph (b) above, is a fraction of which the numerator is 1 and the
denominator the number of months comprised in the then current Interest Period
applicable to the Loan (or, if the current Interest Period ends after the next
date for payment of interest under this Agreement, the number of months from the
later of the commencement of the current Interest Period or the last due date
for payment of interest to the next date for payment of interest under this
Agreement).

     

    
      	
              18.3

            	
              Shortfall in
      Earnings.  If the aggregate Earnings received are
      insufficient in any month for the required amount to be transferred to the
      Retention Account under Clause 18.2, the Borrower shall make up the amount
      of the insufficiency on demand from the Agent; but, without thereby
      prejudicing the Agent's right to make such demand at any time, the Agent
      may, if so authorised by the Majority Lenders, permit the Borrower to make
      up all or part of the insufficiency by increasing the amount of any
      transfer under Clause 18.2 from the Earnings received in the next or
      subsequent months.

            

    

     

    
      	
              18.4

            	
              Application of
      retentions.  Until an Event of Default occurs, the Agent
      shall on each due date for the payment of interest under this Agreement
      distribute to the Lenders in accordance with Clause 16.4 so much of the
      then balance on the Retention Account as
equals:

            

    

     

    
      	
              (a)

            	
              any
      repayment instalment due in accordance with Clause 8.1 on that interest
      payment date; and

            

    

     

    
      	
              (b)

            	
              the
      amount of interest payable on that interest payment
  date

            

    

     

    
      	
               
      

            	
              in
      discharge of the Borrower's liability for that repayment instalment or
      that interest.

            

    

     

    
      	
              18.5

            	
              Interest accrued on Retention
      Account.  Any credit balance on the Retention Account
      shall bear interest at the rate from time to time offered by the Agent to
      its customers for Dollar deposits of similar amounts and for periods
      similar to those for which such balances appear to the Agent likely to
      remain on the Retention Account.

            

    

     

    
      	
              18.6

            	
              Release of accrued
      interest.  Interest accruing under Clause 18.5 shall be
      released to the Borrower on each interest payment date unless an Event of
      Default or a Potential Event of Default has occurred or the then credit
      balance on the Retention Account is less
than

            

    

     

    
      
         

      

      
        48

        
          

        

      

      
         

      

    

    what
would have been the balance had the full amount required by Clause 18.2 (and
Clause 18.3, if applicable) been transferred in that and each previous
month.

     

    
      	
              18.7

            	
              Location of
      accounts.  The Borrower shall
  promptly:

            

    

     

    
      	
              (a)

            	
              comply,
      and ensure that the Owners comply, with any requirement of the Agent as to
      the location or re-location of any Earnings Account or the Retention
      Account;

            

    

     

    
      	
              (b)

            	
              execute,
      and ensure that the Owners execute, any documents which the Agent
      specifies to create or maintain in favour of the Security Trustee a
      Security Interest over (and/or rights of set-off, consolidation or other
      rights in relation to) the Earnings Accounts (or any of them) and the
      Retention Account.

            

    

     

    
      	
              18.8

            	
              Debits for expenses
      etc.  The Agent shall be authorised by the Borrower (but
      not obliged) from time to time to debit the Earnings Account without prior
      notice in order to discharge any amount due and payable under Clause 20 or
      21 to a Creditor Party or payment of which any Creditor Party has become
      entitled to demand under Clause 20 or
21.

            

    

     

    
      	
              18.9

            	
              Borrower’ obligations
      unaffected.  The provisions of this Clause 18 do not
      affect:

            

    

     

    
      	
              (a)

            	
              the
      liability of the Borrower to make payments of principal and interest on
      the due dates; or

            

    

     

    
      	
              (b)

            	
              any
      other liability or obligation of the Borrower or any Security Party under
      any Finance Document.

            

    

     

    
      	
              19

            	
              EVENTS
      OF DEFAULT

            

    

     

    
      	
              19.1

            	
              Events of
      Default.  An Event of Default occurs
  if:

            

    

     

    
      	
              (a)

            	
              the
      Borrower or any Security Party fails to pay when due or (if so payable) on
      demand any sum payable under a Finance Document or under any document
      relating to a Finance Document; or

            

    

     

    
      	
              (b)

            	
              any
      breach occurs of Clause 9.2, 11.2, 11.3, 11.4, 11.6, 11.7, 12.2, 12.3,
      12.4, 12.5, 13.2, 15.1 or 18.1; or

            

    

     

    
      	
              (c)

            	
              any
      breach by the Borrower or any Security Party occurs of any provision of a
      Finance Document (other than a breach covered by paragraphs (a) or (b)
      above) if, in the opinion of the Majority Lenders, such default is capable
      of remedy, and such default continues unremedied 10 days after written
      notice from the Agent requesting action to remedy the same;
    or

            

    

     

    
      	
              (d)

            	
              (subject
      to any applicable grace period specified in the Finance Document) any
      breach by the Borrower or any Security Party occurs of any provision of a
      Finance Document (other than a breach covered by paragraphs (a), (b) or
      (c) above); or

            

    

     

    
      	
              (e)

            	
              any
      representation, warranty or statement made by, or by an officer of, the
      Borrower or a Security Party in a Finance Document or in a Drawdown Notice
      or any other notice or document relating to a Finance Document is untrue
      or misleading when it is made; or

            

    

     

    
      	
              (f)

            	
              any
      of the following occurs in relation to any Financial Indebtedness of a
      Relevant Person:

            

    

     

    
      	
               
      

            	
              (i)

            	
              any
      Financial Indebtedness of a Relevant Person is not paid when due or, if so
      payable, on demand; or

            

    

     

    
      
         

      

      
        49

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

            	
              (ii)

            	
              any
      Financial Indebtedness of a Relevant Person becomes due and payable or
      capable of being declared due and payable prior to its stated maturity
      date as a consequence of any event of default;
  or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              a
      lease, hire purchase agreement or charter creating any Financial
      Indebtedness of a Relevant Person is terminated by the lessor or owner or
      becomes capable of being terminated as a consequence of any termination
      event; or

            

    

     

    
      	
               
      

            	
              (iv)

            	
              any
      overdraft, loan, note issuance, acceptance credit, letter of credit,
      guarantee, foreign exchange or other facility, or any swap or other
      derivative contract or transaction, relating to any Financial Indebtedness
      of a Relevant Person ceases to be available or becomes capable of being
      terminated as a result of any event of default, or cash cover is required,
      or becomes capable of being required, in respect of such a facility as a
      result of any event of default; or

            

    

     

    
      	
               
      

            	
              (v)

            	
              any
      Security Interest securing any Financial Indebtedness of a Relevant Person
      becomes enforceable; or

            

    

     

    
      	
              (g)

            	
              any
      of the following occurs in relation to a Relevant
  Person:

            

    

     

    
      	
               
      

            	
              (i)

            	
              a
      Relevant Person becomes, in the opinion of the Majority Lenders, unable to
      pay its debts as they fall due; or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              any
      assets of a Relevant Person are subject to any form of execution,
      attachment, arrest, sequestration or distress in respect of a sum of, or
      sums aggregating, $100,000 or more or the equivalent in another currency;
      or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              any
      administrative or other receiver is appointed over any asset of a Relevant
      Person; or

            

    

     

    
      	
               
      

            	
              (iv)

            	
              a
      Relevant Person makes any formal declaration of bankruptcy or any formal
      statement to the effect that it is insolvent or likely to become
      insolvent, or a winding up or administration order is made in relation to
      a Relevant Person, or the members or directors of a Relevant Person pass a
      resolution to the effect that it should be wound up, placed in
      administration or cease to carry on business, save that this paragraph
      does not apply to a fully solvent winding up of a Relevant Person other
      than the Borrower which is, or is to be, effected for the purposes of an
      amalgamation or reconstruction previously approved by the Majority Lenders
      and effected not later than 3 months after the commencement of the winding
      up; or

            

    

     

    
      	
               
      

            	
              (v)

            	
              a
      petition is presented in any Pertinent Jurisdiction for the winding up or
      administration, or the appointment of a provisional liquidator, of a
      Relevant Person unless the petition is being contested in good faith and
      on substantial grounds and is dismissed or withdrawn within 30 days of the
      presentation of the petition; or

            

    

     

    
      	
               
      

            	
              (vi)

            	
              a
      Relevant Person petitions a court, or presents any proposal for, any form
      of judicial or non-judicial suspension or deferral of payments,
      reorganisation of its debt (or certain of its debt) or arrangement with
      all or a substantial proportion (by number or value) of its creditors or
      of any class of them or any such suspension or deferral of payments,
      reorganisation or arrangement is effected by court order, contract or
      otherwise; or

            

    

     

    
      	
               
      

            	
              (vii)

            	
              any
      meeting of the members or directors of a Relevant Person is summoned for
      the purpose of considering a resolution or proposal to authorise or take
      any action of a type described in paragraphs (iii), (iv), (v) or (vi)
      above; or

            

    

     

    
      
         

      

      
        50

        
          

        

      

      
         

      

    

    

     

    
      	
              (viii)

            	
              in
      a Pertinent Jurisdiction other than England, any event occurs or any
      procedure is commenced which, in the opinion of the Majority Lenders, is
      similar to any of the foregoing; or

            

    

     

    
      	
              (h)

            	
              the
      Borrower or any Security Party ceases or suspends carrying on or changes
      the nature of its business or a part of its business which, in the opinion
      of the Majority Lenders, is material in the context of this Agreement;
      or

            

    

     

    
      	
              (i)

            	
              it
      becomes unlawful in any Pertinent Jurisdiction or
    impossible:

            

    

     

    
      	
               
      

            	
              (i)

            	
              for
      the Borrower or any Security Party to discharge any liability under a
      Finance Document or to comply with any other obligation which the Majority
      Lenders consider material under a Finance Document;
  or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              for
      the Agent, the Security Trustee or the Lenders to exercise or enforce any
      right under, or to enforce any Security Interest created by, a Finance
      Document; or

            

    

     

    
      	
              (j)

            	
              any
      consent necessary to enable any Owner to own, operate or charter a Ship or
      to enable the Borrower or any Security Party to comply with any provision
      which the Majority Lenders consider material of a Finance Document is not
      granted, expires without being renewed, is revoked or becomes liable to
      revocation or any condition of such a consent is not fulfilled;
      or

            

    

     

    
      	
              (k)

            	
              without
      the prior written consent of the Majority Lenders, a change has occurred
      or probably has occurred after the date of this Agreement in the control
      of the Borrower or in the ownership of any of the shares in any Owner or
      in the ultimate control of the voting rights attaching to any of those
      shares; or

            

    

     

    
      	
              (l)

            	
              any
      provision which the Majority Lenders consider material of a Finance
      Document proves to have been or becomes invalid or unenforceable, or a
      Security Interest created by a Finance Document proves to have been or
      becomes invalid or unenforceable or such a Security Interest proves to
      have ranked after, or loses its priority to, another Security Interest or
      any other third party claim or interest;
or

            

    

     

    
      	
              (m)

            	
              the
      security constituted by a Finance Document is in any way imperilled or in
      jeopardy;

            

    

     

    
      	
              (n)

            	
              a
      default occurs under any charterparty in respect of a Ship or any
      Management Agreement;

            

    

     

    
      	
              (o)

            	
              any
      other event occurs or any other circumstances arise or develop including,
      without limitation:

            

    

     

    
      	
               
      

            	
              (i)

            	
              a
      change in the financial position, state of affairs or prospects of any
      Security Party; or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              any
      accident or other event involving any Ship or another vessel owned,
      chartered or operated by a Relevant
Person;

            

    

     

    
      	
               
      

            	
              in
      the light of which the Majority Lenders consider that there is a
      significant risk that the Borrower or any Security Party is, or will later
      become, unable to discharge its liabilities under the Finance Documents as
      they fall due; or

            

    

     

    
      	
              (p)

            	
              the
      Master Agreement is terminated, cancelled, suspended, rescinded or revoked
      or otherwise ceases to remain in full force and effect for any reason
      except with the consent of the Agent, acting with the authorisation of the
      Majority Lenders.

            

    

     

    
      
         

      

      
        51

        
          

        

      

      
         

      

    

    

     

    
      	
              19.2

            	
              Actions following an Event of
      Default.  On, or at any time after, the occurrence of an
      Event of Default:

            

    

     

    
      	
              (a)

            	
              the
      Agent may, and if so instructed by the Majority Lenders, the Agent
      shall:

            

    

     

    
      	
               
      

            	
              (i)

            	
              serve
      on the Borrower a notice stating that the Commitments and all other
      obligations of each Lender to the Borrower under this Agreement are
      terminated; and/or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              serve
      on the Borrower a notice stating that the Loan, all accrued interest and
      all other amounts accrued or owing under this Agreement are immediately
      due and payable or are due and payable on demand;
  and/or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              take
      any other action which, as a result of the Event of Default or any notice
      served under paragraph (i) or (ii) above, the Agent and/or the Lenders are
      entitled to take under any Finance Document or any applicable law;
      and/or

            

    

     

    
      	
              (b)

            	
              the
      Security Trustee may, and if so instructed by the Agent, acting with the
      authorisation of the Majority Lenders, the Security Trustee shall take any
      action which, as a result of the Event of Default or any notice served
      under paragraph (a) (i) or (ii) above, the Security Trustee, the Agent
      and/or the Lenders are entitled to take under any Finance Document or any
      applicable law.

            

    

     

    
      	
              19.3

            	
              Termination of
      Commitments.  On the service of a notice under paragraph
      (a)(i) of Clause 19.2, the Commitments and all other obligations of each
      Lender to the Borrower under this Agreement shall
    terminate.

            

    

     

    
      	
              19.4

            	
              Acceleration of
      Loan.  On the service of a notice under paragraph (a)(ii)
      of Clause 19.2, the Loan, all accrued interest and all other amounts
      accrued or owing from the Borrower or any Security Party under this
      Agreement and every other Finance Document shall become immediately due
      and payable or, as the case may be, payable on
  demand.

            

    

     

    
      	
              19.5

            	
              Multiple notices; action
      without notice.  The Agent may serve notices under
      paragraphs (a) (i) and (ii) of Clause 19.2 simultaneously or on different
      dates and it and/or the Security Trustee may take any action referred to
      in that Clause if no such notice is served or simultaneously with or at
      any time after the service of both or either of such
    notices.

            

    

     

    
      	
              19.6

            	
              Notification of Creditor
      Parties and Security Parties.  The Agent shall send to
      each Lender, the Security Trustee and each Security Party a copy of the
      text of any notice which the Agent serves on the Borrower under Clause
      19.2; but the notice shall become effective when it is served on the
      Borrower, and no failure or delay by the Agent to send a copy of the text
      of the notice to any other person shall invalidate the notice or provide
      the Borrower or any Security Party with any form of claim or
      defence.

            

    

     

    
      	
              19.7

            	
              Lender's rights
      unimpaired.  Nothing in this Clause shall be taken to
      impair or restrict the exercise of any right given to individual Lenders
      under a Finance Document or the general law; and, in particular, this
      Clause is without prejudice to Clause
3.1.

            

    

     

    
      	
              19.8

            	
              Exclusion of Creditor Party
      Liability.  No Creditor Party, and no receiver or manager
      appointed by the Security Trustee, shall have any liability to the
      Borrower or a Security Party:

            

    

     

    
      	
              (a)

            	
              for
      any loss caused by an exercise of rights under, or enforcement of a
      Security Interest created by, a Finance Document or by any failure or
      delay to exercise such a right or to enforce such a Security Interest;
      or

            

    

     

    
      
         

      

      
        52

        
          

        

      

      
         

      

    

    

     

    
      	
              (b)

            	
              as
      mortgagee in possession or otherwise, for any income or principal amount
      which might have been produced by or realised from any asset comprised in
      such a Security Interest or for any reduction (however caused) in the
      value of such an asset;

            

    

     

    
      	
               
      

            	
              except
      that this does not exempt a Creditor Party or a receiver or manager from
      liability for losses shown to have been caused by the gross negligence or
      the wilful misconduct of such Creditor Party's own officers and employees
      or (as the case may be) such receiver's or manager's own partners or
      employees.

            

    

     

    
      	
              19.9

            	
              Relevant
      Persons.  In this Clause 19 “a Relevant Person” means
      the Borrower, a Security Party and any other member of the Group; but
      excluding any company which is dormant and the value of whose gross assets
      is $50,000 or less.

            

    

     

    
      	
              19.10

            	
              Interpretation.  In
      Clause 19.1(f) references to an event of default or a termination event
      include any event, howsoever described, which is similar to an event of
      default in a facility agreement or a termination event in a finance lease;
      and in Clause 19.1(g) “petition” includes an
  application.

            

    

     

    
      	
              19.11

            	
              Position of the Swap
      Bank.  Neither the Agent nor the Security Trustee shall
      be obliged, in connection with any action taken or proposed to be taken
      under or pursuant to the foregoing provisions of this Clause 19, to have
      any regard to the requirements of the Swap Bank except to the extent that
      the Swap Bank is also a Lender.

            

    

     

    
      	
              20

            	
              FEES
      AND EXPENSES

            

    

     

    
      	
              20.1

            	
              Commitment, early termination
      and facility fees.  The Borrower shall pay to the
      Agent:

            

    

     

    
      	
              (a)

            	
              a
      commitment fee for distribution among the Lenders pro rata to their
      Commitments at the rate of 0.50 per cent. per annum on the amount of the
      Total Commitments less the amount of the Loan for the period from (and
      including) 23 November 2007 up to and including the last day of the
      Availability Period, such fee to be paid quarterly in arrears and on the
      last day of such period;

            

    

     

    
      	
              (b)

            	
              if:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      Loan (for any part thereof) is prepaid at any time before the date falling
      on the second anniversary of this Agreement through a loan or credit
      facility made available by a bank or financial institution other than a
      Lender; or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      Borrower cancels any part of the Total Commitments pursuant to Clause 8.7
      prior to the first Drawdown Date,

            

    

     

    the
Borrower shall on the date the prepayment is made or the date on which any part
of the Total Commitments are cancelled pay to the Agent an early termination fee
equal to 0.2 per cent. of the amount prepaid or cancelled; and

     

    
      	
              (c)

            	
              such
      other facility fees as are referred to in the Fee Letter, such fees being
      payable at the times and in the manner referred to in the Fee
      Letter.

            

    

     

    
      	
              20.2

            	
              Costs of negotiation,
      preparation etc.  The Borrower shall pay to the Agent on
      its demand the amount of all expenses incurred by the Agent or the
      Security Trustee in connection with the negotiation, preparation,
      execution or registration of any Finance Document or any related document
      or with any transaction contemplated by a Finance Document or a related
      document (including, without limitation, any legal fees (which shall
      include, for the avoidance of doubt, the fees incurred by the Agent with
      respect to

            

    

     

    
      
         

      

      
        53

        
          

        

      

      
         

      

    

    the
legal opinions referred to in Schedule 4) or out of pocket expenses and printing
expenses).

     

    
      	
              20.3

            	
              Costs of variations,
      amendments, enforcement etc.  The Borrower shall pay to
      the Agent, on the Agent's demand, the amount of all expenses (including,
      without limitation, any legal fees or expenses) incurred by a Lender in
      connection with:

            

    

     

    
      	
              (a)

            	
              any
      amendment or supplement to a Finance Document, or any proposal for such an
      amendment to be made;

            

    

     

    
      	
              (b)

            	
              any
      consent or waiver by the Lenders, the Majority Lenders or the Lender
      concerned under or in connection with a Finance Document, or any request
      for such a consent or waiver;

            

    

     

    
      	
              (c)

            	
              the
      valuation of any security provided or offered under Clause 15 or any other
      matter relating to such security;

            

    

     

    
      	
              (d)

            	
              such
      circumstances where the Agent, in its absolute opinion, considers that
      there has been a material change to the insurances in respect of a Ship,
      the review of the insurances of that Ship pursuant to Clause
      13.18;

            

    

     

    
      	
              (e)

            	
              any
      step taken by the Lender concerned or the Swap Bank concerned with a view
      to the protection, exercise or enforcement of any right or Security
      Interest created by a Finance Document or for any similar
      purpose.

            

    

     

    
      	
               
      

            	
              There
      shall be recoverable under paragraph (e) the full amount of all legal
      expenses, whether or not such as would be allowed under rules of court or
      any taxation or other procedure carried out under such
    rules.

            

    

     

    
      	
              20.4

            	
              Documentary
      taxes.  The Borrower shall promptly pay any tax payable
      on or by reference to any Finance Document, and shall, on the Agent's
      demand, fully indemnify each Creditor Party against any liabilities and
      expenses resulting from any failure or delay by the Borrower to pay such a
      tax.

            

    

     

    
      	
              20.5

            	
              Certification of
      amounts.  A notice which is signed by two officers of a
      Creditor Party, which states that a specified amount, or aggregate amount,
      is due to that Creditor Party under this Clause 20 and which indicates
      (without necessarily specifying a detailed breakdown) the matters in
      respect of which the amount, or aggregate amount, is due shall be prima
      facie evidence that the amount, or aggregate amount, is
    due.

            

    

     

    
      	
              21

            	
              INDEMNITIES

            

    

     

    
      	
              21.1

            	
              Indemnities regarding borrowing
      and repayment of Loan.  The Borrower shall fully
      indemnify the Agent and each Lender on the Agent's demand and the Security
      Trustee on its demand in respect of all expenses, liabilities and losses
      which are incurred by that Creditor Party, or which that Creditor Party
      reasonably and with due diligence estimates that it will incur, as a
      result of or in connection with:

            

    

     

    
      	
              (a)

            	
              an
      Advance not being borrowed on the date specified in the Drawdown Notice
      for that Advance for any reason other than a default by the Lender
      claiming the indemnity;

            

    

     

    
      	
              (b)

            	
              the
      receipt or recovery of all or any part of the Loan or an overdue sum
      otherwise than on the last day of an Interest Period or other relevant
      period;

            

    

     

    
      	
              (c)

            	
              any
      failure (for whatever reason) by the Borrower to make payment of any
      amount due under a Finance Document on the due date or, if so payable, on
      demand (after giving credit for any default interest paid by the Borrower
      on the amount concerned under Clause
7);

            

    

     

    
      
         

      

      
        54

        
          

        

      

      
         

      

    

    

     

    
      	
              (d)

            	
              the
      occurrence and/or continuance of an Event of Default or a Potential Event
      of Default and/or the acceleration of repayment of the Loan under Clause
      19;

            

    

     

    
      	
               
      

            	
              and
      in respect of any tax (other than tax on its overall net income) for which
      a Creditor Party is liable in connection with any amount paid or payable
      to that Creditor Party (whether for its own account or otherwise) under
      any Finance Document.

            

    

     

    
      	
              21.2

            	
              Breakage
      costs.  Without limiting its generality, Clause 21.1
      covers any liability, expense or loss, including a loss of a prospective
      profit, incurred by a Lender:

            

    

     

    
      	
              (a)

            	
              in
      liquidating or employing deposits from third parties acquired or arranged
      to fund or maintain all or any part of its Contribution and/or any overdue
      amount (or an aggregate amount which includes its Contribution or any
      overdue amount); and

            

    

     

    
      	
              (b)

            	
              in
      terminating, or otherwise in connection with, any interest and/or currency
      swap or any other transaction entered into (whether with another legal
      entity or with another office or department of the Lender concerned) to
      hedge any exposure arising under this Agreement or that part which the
      Lender concerned determines is fairly attributable to this Agreement of
      the amount of the liabilities, expenses or losses (including losses of
      prospective profits) incurred by it in terminating, or otherwise in
      connection with, a number of transactions of which this Agreement is
      one.

            

    

     

    
      	
              21.3

            	
              Miscellaneous
      indemnities.  The Borrower shall fully indemnify each
      Creditor Party severally on their respective demands in respect of all
      claims, demands, proceedings, liabilities, taxes, losses and expenses of
      every kind (“liability
      items”) which may be made or brought against, or incurred by, the
      relevant Creditor Party, in any country, in relation
  to:

            

    

     

    
      	
              (a)

            	
              any
      action taken, or omitted or neglected to be taken, under or in connection
      with any Finance Document by the Agent, the Security Trustee or any other
      Creditor Party or by any receiver appointed under a Finance
      Document;

            

    

     

    
      	
              (b)

            	
              any
      other event, matter or question which occurs or arises at any time during
      the Security Period and which has any connection with, or any bearing on,
      any Finance Document, any payment or other transaction relating to a
      Finance Document or any asset covered (or previously covered) by a
      Security Interest created (or intended to be created) by a Finance
      Document;

            

    

     

    
      	
               
      

            	
              other
      than liability items which are shown to have been caused by the gross
      negligence or the wilful misconduct of the relevant Creditor Party’s own
      officers or employees.

            

    

     

    
      	
              21.4

            	
              Extension of indemnities;
      environmental indemnity.  Without prejudice to its
      generality, Clause 21.3 covers:

            

    

     

    
      	
              (a)

            	
              any
      matter which would be covered by Clause 21.3 if any of the references in
      that Clause to a Lender were a reference to the Agent or (as the case may
      be) to the Security Trustee; and

            

    

     

    
      	
              (b)

            	
              any
      liability items which arise, or are asserted, under or in connection with
      any law relating to safety at sea, pollution, the protection of the
      environment, the ISM Code or the ISPS
Code.

            

    

     

    
      	
              21.5

            	
              Currency
      indemnity.  If any sum due from the Borrower or any
      Security Party to a Creditor Party under a Finance Document or under any
      order or judgment relating to a Finance Document has to be converted from
      the currency in which the Finance Document provided for the sum to be paid
      (the “Contractual
      Currency”) into another currency (the “Payment Currency”) for
      the purpose of:

            

    

     

    
      
         

      

      
        55

        
          

        

      

      
         

      

    

    

     

    
      	
              (a)

            	
              making
      or lodging any claim or proof against the Borrower or any Security Party,
      whether in its liquidation, any arrangement involving it or otherwise;
      or

            

    

     

    
      	
              (b)

            	
              obtaining
      an order or judgment from any court or other tribunal;
  or

            

    

     

    
      	
              (c)

            	
              enforcing
      any such order or judgment;

            

    

     

    
      	
               
      

            	
              the
      Borrower shall indemnify the Creditor Party concerned against the loss
      arising when the amount of the payment actually received by that Creditor
      Party is converted at the available rate of exchange into the Contractual
      Currency.

            

    

     

    
      	
               
      

            	
              In
      this Clause 21.5, the “available rate of
      exchange” means the rate at which the Creditor Party concerned is
      able at the opening of business (Edinburgh time) on the Business Day after
      it receives the sum concerned to purchase the Contractual Currency with
      the Payment Currency.

            

    

     

    
      	
               
      

            	
              This
      Clause 21.5 creates a separate liability of the Borrower which is distinct
      from its other liabilities under the Finance Documents and which shall not
      be merged in any judgment or order relating to those other
      liabilities.

            

    

     

    
      	
              21.6

            	
              Certification of
      amounts.  A notice which is signed by 2 officers of a
      Creditor Party, which states that a specified amount, or aggregate amount,
      is due to that Creditor Party under this Clause 21 and which indicates
      (without necessarily specifying a detailed breakdown) the matters in
      respect of which the amount, or aggregate amount, is due shall be prima
      facie evidence that the amount, or aggregate amount, is
    due.

            

    

     

    
      	
              21.7

            	
              Sums deemed due to a
      Lender.  For the purposes of this Clause 21, a sum
      payable by the Borrower to the Agent or the Security Trustee for
      distribution to a Lender shall be treated as a sum due to that
      Lender.

            

    

     

    
      	
              21.8

            	
              Application to Master
      Agreement.  For the avoidance of doubt, Clause 21.5 does
      not apply in respect of sums due from the Borrower to the Swap Bank under
      or in connection with the Master Agreement as to which sums the provisions
      of section 8 (Contractual Currency) of the Master Agreement shall
      apply.

            

    

     

    
      	
              22

            	
              NO
      SET-OFF OR TAX DEDUCTION

            

    

     

    
      	
              22.1

            	
              No
      deductions.  All amounts due from the Borrower under a
      Finance Document shall be paid:

            

    

     

    
      	
              (a)

            	
              without
      any form of set-off, cross-claim or condition;
  and

            

    

     

    
      	
              (b)

            	
              free
      and clear of any tax deduction except a tax deduction which the Borrower
      is required by law to make.

            

    

     

    
      	
              22.2

            	
              Grossing-up for
      taxes.  If the Borrower is required by law to make a tax
      deduction from any payment:

            

    

     

    
      	
              (a)

            	
              the
      Borrower shall notify the Agent as soon as it becomes aware of the
      requirement;

            

    

     

    
      	
              (b)

            	
              the
      Borrower shall pay the tax deducted to the appropriate taxation authority
      promptly, and in any event before any fine or penalty
    arises;

            

    

     

    
      	
              (c)

            	
              the
      amount due in respect of the payment shall be increased by the amount
      necessary to ensure that each Creditor Party receives and retains (free
      from any liability relating to the tax deduction) a net amount which,
      after the tax deduction, is equal to the full amount which it would
      otherwise have received.

            

    

     

    
      
         

      

      
        56

        
          

        

      

      
         

      

    

    

     

    
      	
              22.3

            	
              Evidence of payment of
      taxes.  Within 1 month after making any tax deduction,
      the Borrower concerned shall deliver to the Agent documentary evidence
      satisfactory to the Agent that the tax had been paid to the appropriate
      taxation authority.

            

    

     

    
      	
              22.4

            	
              Exclusion of tax on overall net
      income.  In this Clause 22 “tax deduction” means any
      deduction or withholding for or on account of any present or future tax
      except tax on a Creditor Party's overall net
  income.

            

    

     

    
      	
              22.5

            	
              Application to the Master
      Agreement.  For the avoidance of doubt, Clause 22 does
      not apply in respect of sums due from the Borrower to the Swap Bank under
      or in connection with the Master Agreement as to which sums the provisions
      of section 2(d) (Deduction or Withholding for Tax) of the Master Agreement
      shall apply.

            

    

     

    
      	
              23

            	
              ILLEGALITY,
      ETC

            

    

     

    
      	
              23.1

            	
              Illegality.  This
      Clause 23 applies if a Lender (the “Notifying Lender”)
      notifies the Agent that it has become, or will with effect from a
      specified date, become:

            

    

     

    
      	
              (a)

            	
              unlawful
      or prohibited as a result of the introduction of a new law, an amendment
      to an existing law or a change in the manner in which an existing law is
      or will be interpreted or applied;
or

            

    

     

    
      	
              (b)

            	
              contrary
      to, or inconsistent with, any
regulation,

            

    

     

    
      	
               
      

            	
              for
      the Notifying Lender to maintain or give effect to any of its obligations
      under this Agreement in the manner contemplated by this
      Agreement.

            

    

     

    
      	
              23.2

            	
              Notification of
      illegality.  The Agent shall promptly notify the
      Borrower, the Security Parties, the Security Trustee and the other Lenders
      of the notice under Clause 23.1 which the Agent receives from the
      Notifying Lender.

            

    

     

    
      	
              23.3

            	
              Prepayment; termination of
      Commitment.  On the Agent notifying the Borrower under
      Clause 23.2, the Notifying Lender's Commitment shall terminate; and
      thereupon or, if later, on the date specified in the Notifying Lender's
      notice under Clause 23.1 as the date on which the notified event would
      become effective the Borrower shall prepay the Notifying Lender's
      Contribution in accordance with Clause
8.

            

    

     

    
      	
              23.4

            	
              Mitigation.  If
      circumstances arise which would result in a notification under
      Clause 23.1 then, without in any way limiting the rights of the
      Notifying Lender under Clause 23.3, the Notifying Lender shall use
      reasonable endeavours to transfer its obligations, liabilities and rights
      under this Agreement and the Finance Documents to another office or
      financial institution not affected by the circumstances but the Notifying
      Lender shall not be under any obligation to take any such action if, in
      its opinion, to do would or might:

            

    

     

    
      	
              (a)

            	
              have
      an adverse effect on its business, operations or financial condition;
      or

            

    

     

    
      	
              (b)

            	
              involve
      it in any activity which is unlawful or prohibited or any activity that is
      contrary to, or inconsistent with, any regulation;
  or

            

    

     

    
      	
              (c)

            	
              involve
      it in any expense (unless indemnified to its satisfaction) or tax
      disadvantage.

            

    

     

    
      	
              24

            	
              INCREASED
      COSTS

            

    

     

    
      	
              24.1

            	
              Increased
      costs.  This Clause 24 applies if a Lender (the “Notifying Lender”)
      notifies the Agent that the Notifying Lender considers that as a result
      of:

            

    

     

    
      
         

      

      
        57

        
          

        

      

      
         

      

    

    

     

    
      	
              (a)

            	
              the
      introduction or alteration after the date of this Agreement of a law or
      regulation or an alteration after the date of this Agreement in the manner
      in which a law or regulation is interpreted or applied (disregarding any
      effect which relates to the application to payments under this Agreement
      of a tax on the Notifying Lender's overall net income);
  or

            

    

     

    
      	
              (b)

            	
              the
      effect of complying with any law or regulation (including any which
      relates to capital adequacy or liquidity controls or which affects the
      manner in which the Notifying Lender allocates capital resources to its
      obligations under this Agreement (including, without limitation, any laws
      or regulations which shall replace, amend and/or supplement those set out
      in the statement of the Basle Committee on Banking Regulations and
      Supervisory Practices dated July 1988 and entitled “International
      Convergence of Capital Management and Capital Structures”)) which is
      introduced, or altered, or the interpretation or application of which is
      altered, after the date of this
Agreement,

            

    

     

    
      	
               
      

            	
              is
      that the Notifying Lender (or a parent company of it) has incurred or will
      incur an “increased
      cost”, that is to say:

            

    

     

    
      	
               
      

            	
              (i)

            	
              an
      additional or increased cost incurred as a result of, or in connection
      with, the Notifying Lender having entered into, or being a party to, this
      Agreement or a Transfer Certificate, of funding or maintaining its
      Commitment or Contribution or performing its obligations under this
      Agreement, or of having outstanding all or any part of its Contribution or
      other unpaid sums; or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              a
      reduction in the amount of any payment to the Notifying Lender under this
      Agreement or in the effective return which such a payment represents to
      the Notifying Lender or on its
capital;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              an
      additional or increased cost of funding all or maintaining all or any of
      the advances comprised in a class of advances formed by or including the
      Notifying Lender's Contribution or (as the case may require) the
      proportion of that cost attributable to the Contribution;
    or

            

    

     

    
      	
               
      

            	
              (iv)

            	
              a
      liability to make a payment, or a return foregone, which is calculated by
      reference to any amounts received or receivable by the Notifying Lender
      under this Agreement;

            

    

     

    
      	
               
      

            	
              but
      not an item attributable to a change in the rate of tax on the overall net
      income of the Notifying Lender (or a parent company of it) or an item
      covered by the indemnity for tax in Clause 21.1 or by Clause
      22.

            

    

     

    
      	
               
      

            	
              For
      the purposes of this Clause 24.1 the Notifying Lender may in good faith
      allocate or spread costs and/or losses among its assets and liabilities
      (or any class thereof) on such basis as it considers
      appropriate.

            

    

     

    
      	
              24.2

            	
              Notification to Borrower of
      claim for increased costs.  The Agent shall promptly
      notify the Borrower and the Security Parties of the notice which the Agent
      received from the Notifying Lender under Clause
  24.1.

            

    

     

    
      	
              24.3

            	
              Payment of increased
      costs.  The Borrower shall pay to the Agent, at the end
      of any Interest Period during which the Agent makes demand, for the
      account of the Notifying Lender, the amounts which the Agent from time to
      time notifies the Borrower that the Notifying Lender has specified to be
      necessary to compensate the Notifying Lender for the increased
      cost.

            

    

     

    
      	
              24.4

            	
              Notice of
      prepayment.  If the Borrower is not willing to continue
      to compensate the Notifying Lender for the increased cost under Clause
      24.3, the Borrower may give the

            

    

     

    
      
         

      

      
        58

        
          

        

      

      
         

      

    

    Agent
not less than 14 days' notice of its intention to prepay the Notifying Lender's
Contribution at the end of an Interest Period.

     

    
      	
              24.5

            	
              Prepayment; termination of
      Commitment.  A notice under Clause 24.4 shall be
      irrevocable; the Agent shall promptly notify the Notifying Lender of the
      Borrower’s notice of intended prepayment;
and:

            

    

     

    
      	
              (a)

            	
              on
      the date on which the Agent serves that notice, the Commitment of the
      Notifying Lender shall be cancelled;
and

            

    

     

    
      	
              (b)

            	
              on
      the date specified in its notice of intended prepayment, the Borrower
      shall prepay (without premium or penalty) the Notifying Lender's
      Contribution, together with accrued interest thereon at the applicable
      rate plus the applicable Margin and the Mandatory Cost (if
      any).

            

    

     

    
      	
              24.6

            	
              Application of
      prepayment.  Clause 8 shall apply in relation to the
      prepayment.

            

    

     

    
      	
              25

            	
              SET-OFF

            

    

     

    
      	
              25.1

            	
              Application of credit
      balances.  Each Creditor Party may without prior
      notice:

            

    

     

    
      	
              (a)

            	
              apply
      any balance (whether or not then due) which at any time stands to the
      credit of any account in the name of the Borrower at any office in any
      country of that Creditor Party in or towards satisfaction of any sum then
      due from the Borrower to that Creditor Party under any of the Finance
      Documents; and

            

    

     

    
      	
              (b)

            	
              for
      that purpose:

            

    

     

    
      	
               
      

            	
              (i)

            	
              break,
      or alter the maturity of, all or any part of a deposit of the
      Borrower;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              convert
      or translate all or any part of a deposit or other credit balance into
      Dollars;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              enter
      into any other transaction or make any entry with regard to the credit
      balance which the Creditor Party concerned considers
      appropriate.

            

    

     

    
      	
              25.2

            	
              Existing rights
      unaffected.  No Creditor Party shall be obliged to
      exercise any of its rights under Clause 25.1; and those rights shall be
      without prejudice and in addition to any right of set-off, combination of
      accounts, charge, lien or other right or remedy to which a Creditor Party
      is entitled (whether under the general law or any
    document).

            

    

     

    
      	
              25.3

            	
              Sums deemed due to a
      Lender.  For the purposes of this Clause 25, a sum
      payable by the Borrower to the Agent or the Security Trustee for
      distribution to, or for the account of, a Lender shall be treated as a sum
      due to that Lender; and each Lender's proportion of a sum so payable for
      distribution to, or for the account of, the Lenders shall be treated as a
      sum due to such Lender.

            

    

     

    
      	
              26

            	
              TRANSFERS
      AND CHANGES IN LENDING OFFICES

            

    

     

    
      	
              26.1

            	
              Transfer by
      Borrower.  The Borrower may not, without the prior
      written consent of the Agent, given on the instructions of all the
      Lenders:

            

    

     

    
      	
              (a)

            	
              transfer
      any of its rights or obligations under any Finance Document;
      or

            

    

     

    
      	
              (b)

            	
              enter
      into any merger, de-merger or other reorganisation, or carry out any other
      act, as a result of which any of its rights or liabilities would vest in,
      or pass to, another person.

            

    

     

    
      	
              26.2

            	
              Transfer by a
      Lender.  Subject to Clause 26.5, a Lender (the “Transferor Lender”) may
      at any time, cause:

            

    

     

    
      
         

      

      
        59

        
          

        

      

      
         

      

    

    

     

    
      	
              (a)

            	
              its
      rights in respect of all or part of its Contribution;
  or

            

    

     

    
      	
              (b)

            	
              its
      obligations in respect of all or part of its Commitment;
  or

            

    

     

    
      	
              (c)

            	
              a
      combination of (a) and (b)

            

    

     

    
      	
               
      

            	
              to
      be (in the case of its rights) transferred to, or (in the case of its
      obligations) assumed by, another bank or financial institution which is
      experienced in ship financing (a “Transferee Lender”) by
      delivering to the Agent a completed certificate in the form set out in
      Schedule 4 with any modifications approved or required by the Agent (a
      “Transfer
      Certificate”) executed by the Transferor Lender and the Transferee
      Lender.

            

    

     

    
      	
               
      

            	
              However
      any rights and obligations of the Transferor Lender in its capacity as
      Agent or Security Trustee will have to be dealt with separately in
      accordance with the Agency and Trust
Deed.

            

    

     

    
      	
               
      

            	
              A
      transfer pursuant to this Clause 26.2
shall:

            

    

     

    
      	
               
      

            	
              (i)

            	
              require
      the prior written consent of the
Agent;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              be
      effected without any consultation with, but with notice to, the Borrower
      and without any cost to the
Borrower:

            

    

     

    
      	
               
      

            	
              (A)

            	
              following
      the occurrence of an Event of
Default;

            

    

     

    
      	
               
      

            	
              (B)

            	
              if
      such transfer is to a subsidiary or any other company or financial
      institution which is in the same ownership or control as the Transferor
      Lender; and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              require
      prior consultation with the Borrower in all circumstances (other than
      those referred to in sub-paragraph (ii)
above).

            

    

     

    
      	
              26.3

            	
              Transfer Certificate, delivery
      and notification.  As soon as reasonably practicable
      after a Transfer Certificate is delivered to the Agent, it shall (unless
      it has reason to believe that the Transfer Certificate may be
      defective):

            

    

     

    
      	
              (a)

            	
              sign
      the Transfer Certificate on behalf of itself, the Borrower, the Security
      Parties, the Security Trustee and each of the
  Lenders;

            

    

     

    
      	
              (b)

            	
              on
      behalf of the Transferee Lender, send to the Borrower and each Security
      Party letters or faxes notifying them of the Transfer Certificate and
      attaching a copy of it; and

            

    

     

    
      	
              (c)

            	
              send
      to the Transferee Lender copies of the letters or faxes sent under
      paragraph (b) above.

            

    

     

    
      	
              26.4

            	
              Effective Date of Transfer
      Certificate.  A Transfer Certificate becomes effective on
      the date, if any, specified in the Transfer Certificate as its effective
      date Provided that
      it is signed by the Agent under Clause 26.3 on or before that
      date.

            

    

     

    
      	
              26.5

            	
              No transfer without Transfer
      Certificate.  No assignment or transfer of any right or
      obligation of a Lender under any Finance Document is binding on, or
      effective in relation to, the Borrower, any Security Party, the Agent or
      the Security Trustee unless it is effected, evidenced or perfected by a
      Transfer Certificate.

            

    

     

    
      	
              26.6

            	
              Lender re-organisation; waiver
      of Transfer Certificate.  However, if a Lender enters
      into any merger, de-merger or other reorganisation as a result of which
      all its rights or obligations vest in another person (the “successor”), the
      successor shall automatically

            

    

     

    
      
         

      

      
        60

        
          

        

      

      
         

      

    

    and
without any further act being necessary become a Lender with the same Commitment
and Contribution as were held by the predecessor Lender.

     

    
      	
              26.7

            	
              Effect of Transfer
      Certificate.  A Transfer Certificate takes effect in
      accordance with English law as
follows:

            

    

     

    
      	
              (a)

            	
              to
      the extent specified in the Transfer Certificate, all rights and interests
      (present, future or contingent) which the Transferor Lender has under or
      by virtue of the Finance Documents are assigned to the Transferee Lender
      absolutely, free of any defects in the Transferor Lender's title and of
      any rights or equities which the Borrower or any Security Party had
      against the Transferor Lender;

            

    

     

    
      	
              (b)

            	
              the
      Transferor Lender's Commitment is discharged to the extent specified in
      the Transfer Certificate;

            

    

     

    
      	
              (c)

            	
              the
      Transferee Lender becomes a Lender with the Contribution previously held
      by the Transferor Lender (or the part thereof specified in the Transfer
      Certificate) and a Commitment of an amount specified in the Transfer
      Certificate;

            

    

     

    
      	
              (d)

            	
              the
      Transferee Lender becomes bound by all the provisions of the Finance
      Documents which are applicable to the Lenders generally, including those
      about pro-rata sharing and the exclusion of liability on the part of, and
      the indemnification of, the Agent and the Security Trustee and, to the
      extent that the Transferee Lender becomes bound by those provisions (other
      than those relating to exclusion of liability), the Transferor Lender
      ceases to be bound by them;

            

    

     

    
      	
              (e)

            	
              any
      part of the Loan which the Transferee Lender advances after the Transfer
      Certificate's effective date ranks in point of priority and security in
      the same way as it would have ranked had it been advanced by the
      transferor, assuming that any defects in the transferor's title and any
      rights or equities of the Borrower or any Security Party against the
      Transferor Lender had not existed;

            

    

     

    
      	
              (f)

            	
              the
      Transferee Lender becomes entitled to all the rights under the Finance
      Documents which are applicable to the Lenders generally, including but not
      limited to those relating to the Majority Lenders and those under Clause
      5.5 and Clause 20, and to the extent that the Transferee Lender becomes
      entitled to such rights, the Transferor Lender ceases to be entitled to
      them; and

            

    

     

    
      	
              (g)

            	
              in
      respect of any breach of a warranty, undertaking, condition or other
      provision of a Finance Document or any misrepresentation made in or in
      connection with a Finance Document, the Transferee Lender shall be
      entitled to recover damages by reference to the loss incurred by it as a
      result of the breach or misrepresentation, irrespective of whether the
      original Lender would have incurred a loss of that kind or
      amount.

            

    

     

    
      	
               
      

            	
              The
      rights and equities of the Borrower or any Security Party referred to
      above include, but are not limited to, any right of set off and any other
      kind of cross-claim.

            

    

     

    
      	
              26.8

            	
              Maintenance of register of
      Lenders.  During the Security Period the Agent shall
      maintain a register in which it shall record the name, Commitment,
      Contribution and administrative details (including the lending office)
      from time to time of each Lender holding a Transfer Certificate and the
      effective date (in accordance with Clause 26.4) of the Transfer
      Certificate; and the Agent shall make the register available for
      inspection by any Lender, the Security Trustee and the Borrower during
      normal banking hours, subject to receiving at least 5 Business Days prior
      notice.

            

    

     

    
      	
              26.9

            	
              Reliance on register of
      Lenders.  The entries on that register shall, in the
      absence of manifest error, be conclusive in determining the identities of
      the Lenders and the amounts of their Commitments and Contributions and the
      effective dates of Transfer
Certificates

            

    

     

    
      
         

      

      
        61

        
          

        

      

      
         

      

    

    and
may be relied upon by the Agent and the other parties to the Finance Documents
for all purposes relating to the Finance Documents.

     

    
      	
              26.10

            	
              Authorisation of Agent to sign
      Transfer Certificates.  The Borrower, the Security
      Trustee and each Lender irrevocably authorise the Agent to sign Transfer
      Certificates on its behalf.

            

    

     

    
      	
              26.11

            	
              Registration
      fee.  In respect of any Transfer Certificate, the Agent
      shall be entitled to recover a registration fee of $2,000 from the
      Transferor Lender or (at the Agent's option) the Transferee
      Lender.

            

    

     

    
      	
              26.12

            	
              Sub-participation; subrogation
      assignment.  A Lender may sub-participate all or any part
      of its rights and/or obligations under or in connection with the Finance
      Documents without the consent of, or any notice to, the Borrower, any
      Security Party, the Agent or the Security Trustee; and the Lenders may
      assign, in any manner and terms agreed by the Majority Lenders, the Agent
      and the Security Trustee, all or any part of those rights to an insurer or
      surety who has become subrogated to
them.

            

    

     

    
      	
              26.13

            	
              Disclosure of
      information.  A Lender may disclose to a potential
      Transferee Lender or sub-participant any information which the Lender has
      received in relation to the Borrower, any Security Party or their affairs
      under or in connection with any Finance Document, unless the information
      is clearly of a confidential
nature.

            

    

     

    
      	
              26.14

            	
              Change of lending
      office.  A Lender may change its lending office by giving
      notice to the Agent and the change shall become effective on the later
      of:

            

    

     

    
      	
              (a)

            	
              the
      date on which the Agent receives the notice;
and

            

    

     

    
      	
              (b)

            	
              the
      date, if any, specified in the notice as the date on which the change will
      come into effect.

            

    

     

    
      	
              26.15

            	
              Notification.  On
      receiving such a notice, the Agent shall notify the Borrower and the
      Security Trustee; and, until the Agent receives such a notice, it shall be
      entitled to assume that a Lender is acting through the lending office of
      which the Agent last had notice.

            

    

     

    
      	
              27

            	
              VARIATIONS
      AND WAIVERS

            

    

     

    
      	
              27.1

            	
              Variations, waivers etc. by
      Majority Lenders.  Subject to Clause 27.2, a document
      shall be effective to vary, waive, suspend or limit any provision of a
      Finance Document, or any Creditor Party's rights or remedies under such a
      provision or the general law, only if the document is signed, or
      specifically agreed to by fax, by the Borrower, by the Agent on behalf of
      the Majority Lenders, by the Agent and the Security Trustee in their own
      rights, and, if the document relates to a Finance Document to which a
      Security Party is party, by that Security
Party.

            

    

     

    
      	
              27.2

            	
              Variations, waivers etc.
      requiring agreement of all Lenders.  However, as regards
      the following, Clause 27.1 applies as if the words “by the Agent on behalf
      of the Majority Lenders” were replaced by the words “by or on behalf of
      every Lender and the Swap Bank”:

            

    

     

    
      	
              (a)

            	
              a
      change in the applicable Margin or in the definition of
    LIBOR;

            

    

     

    
      	
              (b)

            	
              a
      change to the date for, or the amount of, any payment of principal,
      interest, fees, or other sum payable under this
  Agreement;

            

    

     

    
      	
              (c)

            	
              a
      change to any Lender's Commitment;

            

    

     

    
      	
              (d)

            	
              an
      extension of the Availability
Period;

            

    

     

    
      
         

      

      
        62

        
          

        

      

      
         

      

    

    

     

    
      	
              (e)

            	
              a
      change to the definition of “Majority Lenders” or “Finance
      Documents”;

            

    

     

    
      	
              (f)

            	
              a
      change to the preamble or to Clause 2, 3, 4, 5.1, 8.1, 8.2, 17, 18, 19 or
      30;

            

    

     

    
      	
              (g)

            	
              a
      change to this Clause 27;

            

    

     

    
      	
              (h)

            	
              any
      release of, or material variation to, a Security Interest, guarantee,
      indemnity or subordination arrangement set out in a Finance Document;
      and

            

    

     

    
      	
              (i)

            	
              any
      other change or matter as regards which this Agreement or another Finance
      Document expressly provides that each Lender's consent is
      required.

            

    

     

    
      	
              27.3

            	
              Exclusion of other or implied
      variations.  Except for a document which satisfies the
      requirements of Clauses 27.1 and 27.2, no document, and no act, course of
      conduct, failure or neglect to act, delay or acquiescence on the part of
      the Creditor Parties or any of them (or any person acting on behalf of any
      of them) shall result in the Creditor Parties or any of them (or any
      person acting on behalf of any of them) being taken to have varied,
      waived, suspended or limited, or being precluded (permanently or
      temporarily) from enforcing, relying on or
  exercising:

            

    

     

    
      	
              (a)

            	
              a
      provision of this Agreement or another Finance Document;
  or

            

    

     

    
      	
              (b)

            	
              an
      Event of Default; or

            

    

     

    
      	
              (c)

            	
              a
      breach by the Borrower or a Security Party of an obligation under a
      Finance Document or the general law;
or

            

    

     

    
      	
              (d)

            	
              any
      right or remedy conferred by any Finance Document or by the general
      law;

            

    

     

    
      	
               
      

            	
              and
      there shall not be implied into any Finance Document any term or condition
      requiring any such provision to be enforced, or such right or remedy to be
      exercised, within a certain or reasonable
time.

            

    

     

    
      	
              28

            	
              NOTICES

            

    

     

    
      	
              28.1

            	
              General.  Unless
      otherwise specifically provided, any notice under or in connection with
      any Finance Document shall be given by registered letter or fax; and
      references in the Finance Documents to written notices, notices in writing
      and notices signed by particular persons shall be construed
      accordingly.

            

    

     

    
      	
              28.2

            	
              Addresses for
      communications.  A notice shall be
  sent:

            

    

     

    
      	
              (a)

            	
              to
      the Borrower:

            	
              Paragon
      Shipping Inc.

              15 Karamanli Street

              166 73 Voula

              Greece

              Fax No: +(30) 210 899 5085

              Attn: the Chief Financial
Officer

            

    

     

    
      	
              (b)

            	
              to
      a Lender:

            	
              At
      the address opposite its name in Schedule 1 or (as the case may require)
      in the relevant Transfer Certificate;
and

            

    

     

    
      	
              (c)

            	
              to
      the Swap Bank:

            	
              Bank
      of Scotland plc

              33 Old Broad Street

              London EC2N 1HZ

              England

              Fax No: +44 207 574 8133

              Attn: General Counsel and Head of
  Legal

            

    

     

     

     

     

    
      
         

      

      
        63

        
          

        

      

      
         

      

    

                                                   

    
      	
              (d)          

            	the
      Agent and the Security Trustee:    	
              Bank
      of Scotland Plc.

              
                Pentland
      House

                
                  8
      Lochside Avenue

                  
                    Edinburgh,
      EH12 9DJ

                    
                      Scotland

                      Fax No: +44 131 658 3220

                      Attn: Marine
  Finance

                    

                  

                

              

            

    

     

    
      	
               
      

            	
              or
      to such other address as the relevant party may notify the Agent or, if
      the relevant party is the Agent or the Security Trustee, the Borrower, the
      Lenders and the Security Parties.

            

    

     

    
      	
              28.3

            	
              Effective date of
      notices.  Subject to Clauses 28.4 and
    28.5:

            

    

     

    
      	
              (a)

            	
              a
      notice which is delivered personally shall be deemed to be served, and
      shall take effect, at the time when it is
  delivered;

            

    

     

    
      	
              (b)

            	
              a
      notice which is delivered by registered letter shall be deemed to be
      served, and shall take effect, 5 Business Days after being deposited in
      the post postage prepaid in an envelope addressed to it at the relevant
      address; and

            

    

     

    
      	
              (c)

            	
              a
      notice which is sent by fax shall be deemed to be served, and shall take
      effect, 2 hours after its transmission is
  completed.

            

    

     

    
      	
              28.4

            	
              Service outside business
      hours.  However, if under Clause 28.3 a notice would be
      deemed to be served:

            

    

     

    
      	
              (a)

            	
              on
      a day which is not a business day in the place of receipt;
    or

            

    

     

    
      	
              (b)

            	
              on
      such a business day, but after 5 p.m. local
  time;

            

    

     

    
      	
               
      

            	
              the
      notice shall (subject to Clause 28.5) be deemed to be served, and shall
      take effect, at 9 a.m. on the next day which is such a business
      day.

            

    

     

    
      	
              28.5

            	
              Illegible
      notices.  Clauses 28.3 and 28.4 do not apply if the
      recipient of a notice notifies the sender within one hour after the time
      at which the notice would otherwise be deemed to be served that the notice
      has been received in a form which is illegible in a material
      respect.

            

    

     

    
      	
              28.6

            	
              Valid
      notices.  A notice under or in connection with a Finance
      Document shall not be invalid by reason that its contents or the manner of
      serving it do not comply with the requirements of this Agreement or, where
      appropriate, any other Finance Document under which it is served
      if:

            

    

     

    
      	
              (a)

            	
              the
      failure to serve it in accordance with the requirements of this Agreement
      or other Finance Document, as the case may be, has not caused any party to
      suffer any significant loss or
  prejudice;  or

            

    

     

    
      	
              (b)

            	
              in
      the case of incorrect and/or incomplete contents, it should have been
      reasonably clear to the party on which the notice was served what the
      correct or missing particulars should have
been.

            

    

     

    
      	
              28.7

            	
              English
      language.  Any notice under or in connection with a
      Finance Document shall be in
English.

            

    

     

    
      
         

      

      
        64

        
          

        

      

      
         

      

    

    

     

    
      	
              28.8

            	
              Meaning of
      “notice”.  In this Clause “notice” includes any demand,
      consent, authorisation, approval, instruction, waiver or other
      communication.

            

    

     

    
      	
              28.9

            	
              Electronic
      communication

            

    

     

    
      	
              (a)

            	
              Any
      communication to be made between the Agent or the Security Trustee and a
      Lender or the Swap Bank under or in connection with the Finance Documents
      may be made by electronic mail or other electronic means, if the Agent,
      the Security Trustee and the relevant Lender or the Swap
    Bank:

            

    

     

    
      	
               
      

            	
              (i)

            	
              agree
      that, unless and until notified to the contrary, this is to be an accepted
      form of communication;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              notify
      each other in writing of their electronic mail address and/or any other
      information required to enable the sending and receipt of information by
      that means; and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              notify
      each other of any change to their address or any other such information
      supplied by them.

            

    

     

    
      	
              (b)

            	
              Any
      electronic communication made between the Agent and a Lender or the
      Security Trustee or the Swap Bank will be effective only when actually
      received in readable form and in the case of any electronic communication
      made by a Lender or the Swap Bank to the Agent or the Security Trustee
      only if it is addressed in such a manner as the Agent or Security Trustee
      shall specify for this purpose.

            

    

     

    
      	
              29

            	
              SUPPLEMENTAL

            

    

     

    
      	
              29.1

            	
              Rights cumulative,
      non-exclusive.  The rights and remedies which the Finance
      Documents give to each Creditor Party
are:

            

    

     

    
      	
              (a)

            	
              cumulative;

            

    

     

    
      	
              (b)

            	
              may
      be exercised as often as appears expedient;
and

            

    

     

    
      	
              (c)

            	
              shall
      not, unless a Finance Document explicitly and specifically states so, be
      taken to exclude or limit any right or remedy conferred by any
      law.

            

    

     

    
      	
              29.2

            	
              Severability of
      provisions.  If any provision of a Finance Document is or
      subsequently becomes void, unenforceable or illegal, that shall not affect
      the validity, enforceability or legality of the other provisions of that
      Finance Document or of the provisions of any other Finance
      Document.

            

    

     

    
      	
              29.3

            	
              Third party
      rights.  A person who is not a party to this Agreement
      has no right under the Contracts (Rights of Third Parties) Act 1999 to
      enforce or to enjoy the benefit of any term of this
    Agreement.

            

    

     

    
      	
              29.4

            	
              Counterparts.  A
      Finance Document may be executed in any number of
      counterparts.

            

    

     

    
      	
              30

            	
              LAW
      AND JURISDICTION

            

    

     

    
      	
              30.1

            	
              English
      law.  This Agreement shall be governed by, and construed
      in accordance with, English law.

            

    

     

    
      	
              30.2

            	
              Exclusive English
      jurisdiction.  Subject to Clause 30.3, the courts of
      England shall have exclusive jurisdiction to settle any disputes which may
      arise out of or in connection with this
  Agreement.

            

    

     

    
      
         

      

      
        65

        
          

        

      

      
         

      

    

    

     

    
      	
              30.3

            	
              Choice of forum for the
      exclusive benefit of the Creditor Parties.  Clause 30.2
      is for the exclusive benefit of the Creditor Parties, each of which
      reserves the right:

            

    

     

    
      	
              (a)

            	
              to
      commence proceedings in relation to any matter which arises out of or in
      connection with this Agreement in the courts of any country other than
      England and which have or claim jurisdiction to that matter;
      and

            

    

     

    
      	
              (b)

            	
              to
      commence such proceedings in the courts of any such country or countries
      concurrently with or in addition to proceedings in England or without
      commencing proceedings in England.

            

    

     

    
      	
               
      

            	
              The
      Borrower shall not commence any proceedings in any country other than
      England in relation to a matter which arises out of or in connection with
      this Agreement.

            

    

     

    
      	
              30.4

            	
              Process
      Agent.  The Borrower irrevocably appoints HTD Services
      Limited at their office for the time being, presently at Irongate House,
      Duke’s Place, London EC3A 7HX, England, to act as its Agent to receive and
      accept on its behalf any process or other document relating to any
      proceedings in the English courts which are connected with this
      Agreement.

            

    

     

    
      	
              30.5

            	
              Creditor Party rights
      unaffected.  Nothing in this Clause 30 shall exclude or
      limit any right which any Creditor Party may have (whether under the law
      of any country, an international convention or otherwise) with regard to
      the bringing of proceedings, the service of process, the recognition or
      enforcement of a judgment or any similar or related matter in any
      jurisdiction.

            

    

     

    
      	
              30.6

            	
              Meaning of
      “proceedings”.  In this Clause 30, “proceedings” means
      proceedings of any kind, including an application for a provisional or
      protective measure.

            

    

     

    AS WITNESS the hands of the
duly authorised officers or attorneys of the parties the day and year first
before written.

     

    
      
         

      

      
        66

        
          

        

      

      
         

      

    

    

    SCHEDULE
1

     

    LENDERS
AND COMMITMENTS

     

    

    
      	
              Lender

            	
              Lending
      Office

            	
              Commitment

              (US
      Dollars)

               

            
	
              Bank
      of Scotland plc.

            	
              Pentland
      House

              8
      Lochside Avenue

              Edinburgh
      EH12 9DJ

              Scotland

            	
              89,000,000

            

    

    

    

    

    

    

    

    

     

    
      
         

      

      
        67

        
          

        

      

      
         

      

    

    SCHEDULE
2

     

    DETAILS
OF INITIAL SHIPS AND OWNERS

     

    
      	
              1

            	
              Name
      of Ship:

            	
              “CORAL
      SEAS”

            
	 
      	 
      	 
      
	 
      	
              Flag:

            	
              Liberia

            
	 
      	 
      	 
      
	 
      	
              IMO
      Number:

            	
              9305099

            
	 
      	 
      	 
      
	 
      	
              Official
      Number:

            	
              13655

            
	 
      	 
      	 
      
	 
      	
              Dwt:

            	
              74432

            
	 
      	 
      	 
      
	 
      	
              Class
      Society and notation:

            	
              [●]

            
	 
      	 
      	 
      
	 
      	
              Year
      built:

            	
              2006

            
	 
      	 
      	 
      
	 
      	
              Owner:

            	
              Imperator
      I Maritime Company

            
	 
      	 
      	 
      
	
              2

            	
              Name
      of Ship:

            	
              “IOLCOS
      DESTINY” tbr “GOLDEN SEAS”

            
	 
      	 
      	 
      
	 
      	
              Current
      flag:

            	
              Malta

            
	 
      	 
      	 
      
	 
      	
              Flag:

            	
              Liberia

            
	 
      	 
      	 
      
	 
      	
              IMO
      Number:

            	
              9305104

            
	 
      	 
      	 
      
	 
      	
              Official
      Number:

            	
              13656

            
	 
      	 
      	 
      
	 
      	
              Dwt:

            	
              74475

            
	 
      	 
      	 
      
	 
      	
              Class
      Society and notation:

            	
              [●]

            
	 
      	 
      	 
      
	 
      	
              Year
      built:

            	
              2006

            
	 
      	 
      	 
      
	 
      	
              Seller:

            	
              Oceanic
      Shipping Company Limited

            
	 
      	 
      	 
      
	 
      	
              Owner:

            	
              Canyon
      I Navigation Corp.

            

    

    

     

    
      
         

      

      
        68

        
          

        

      

      
         

      

    

    

    SCHEDULE
3

     

    DRAWDOWN
NOTICE

     

    To:       Bank
of Scotland plc.

    Pentland House

    8 Lochside Avenue

    Edinburgh EH12 9DJ

    Scotland

    

    Attention:
Loans
Administration                                                                                                           
[               ]
2007

    

    DRAWDOWN
NOTICE

    

    
      	
              1

            	
              We
      refer to the loan agreement (the “Loan Agreement”) dated
      [l] 2007 and
      made between ourselves as Borrower, the Lenders referred to therein
      yourselves as Agent, Mandated Lead Arranger, Underwriter, Swap Bank and as
      Security Trustee in connection with a revolving credit facility of up to
      US$89,000,000.  Terms defined in the Loan Agreement have their
      defined meanings when used in this Drawdown
  Notice.

            

    

     

    
      	
              2

            	
              We
      request to borrow [the Initial Ships Advance] [a Future Ship Advance in
      relation to [l]] as
      follows:

            

    

     

    
      	
              (a)

            	
              Amount
      of Advance:
      $[         ];

            

    

     

    
      	
              (b)

            	
              Drawdown
      Date:  [             ];

            

    

     

    
      	
              (c)

            	
              Duration
      of the first Interest Period shall be
      [        ]
  months;

            

    

     

    
      	
              (d)

            	
              Payment
      instructions : account of
      [                             ]
      and numbered
      [                                          ]
      with
      [                 ]
      of
      [                       ].

            

    

     

    
      	
              3

            	
              We
      represent and warrant that:

            

    

     

    
      	
              (a)

            	
              the
      representations and warranties in Clause 10 of the Loan Agreement would
      remain true and not misleading if repeated on the date of this notice with
      reference to the circumstances now
existing;

            

    

     

    
      	
              (b)

            	
              no
      Event of Default or Potential Event of Default has occurred or will result
      from the borrowing of the Loan.

            

    

     

    
      	
              4

            	
              This
      notice cannot be revoked without the prior consent of the Majority
      Lenders.

            

    

     

    
      	
              5

            	
              [We
      authorise you to deduct all accrued commitment fee and all other facility
      fees applicable to the Advance referred to in Clause 20.1 from the amount
      of the Advance].

            

    

     

    [Name
of Signatory]

    

    ________________________________

    for
and on behalf of

    PARAGON
SHIPPING INC.

    
      
         

      

      
        69

        
          

        

      

      
         

      

    

    SCHEDULE
4

     

    CONDITION
PRECEDENT DOCUMENTS

     

    

    PART
A

    

    The
following are the documents referred to in Clause 9.1(a).

    

    
      	
              1

            	
              A
      duly executed original of each of:

            

    

     

    
      	
              (a)

            	
              this
      Agreement;

            

    

     

    
      	
              (b)

            	
              the
      Agency and Trust Deed;

            

    

     

    
      	
              (c)

            	
              the
      Fee Letter;

            

    

     

    
      	
              (d)

            	
              the
      Master Agreement;

            

    

     

    
      	
              (e)

            	
              the
      Guarantees;

            

    

     

    
      	
              (f)

            	
              the
      Master Agreement Assignment;

            

    

     

    
      	
              (g)

            	
              the
      Initial Ship Earnings Accounts
Charge;

            

    

     

    
      	
              (h)

            	
              the
      Retention Account Charge; and

            

    

     

    
      	
              (i)

            	
              the
      Charterparty Assignments in respect of the Initial
      Charterparties.

            

    

     

    
      	
              2

            	
              Copies
      of the certificate of incorporation and constitutional documents of the
      Borrower and  each Owner.

            

    

     

    
      	
              3

            	
              Copies
      of resolutions of the shareholders and directors of the Borrower and of
      each Owner authorising the execution of each of the Finance Documents to
      which the Borrower and that Owner is a party and, in the case of the
      Borrower, authorising named officers to give the Drawdown Notices and
      other notices under this Agreement.

            

    

     

    
      	
              4

            	
              The
      original of any power of attorney under which any Finance Document is
      executed on behalf of the Borrower and an Owner
  .

            

    

     

    
      	
              5

            	
              Copies
      of all consents which the Borrower and any Owner requires to enter into,
      or make any payment under, any Finance
Document.

            

    

     

    
      	
              6

            	
              The
      originals of any mandates or other documents required in connection with
      the opening or operation of each Initial Ship Earnings Account and the
      Retention Account.

            

    

     

    
      	
              7

            	
              Evidence
      satisfactory to the Agent that each Owner is a direct or indirect
      wholly-owned subsidiary of the
Borrower.

            

    

     

    
      	
              8

            	
              All
      documentation required by each Creditor Party in relation to the Borrower
      and any Security Party pursuant to that Creditor Party’s “know your
      customer” requirements.

            

    

     

    
      	
              9

            	
              Documentary
      evidence that the Agent for service of process named in Clause 30 has
      accepted its appointment.

            

    

     

    
      
         

      

      
        70

        
          

        

      

      
         

      

    

    

     

    
      	
              10

            	
              Favourable
      legal opinions from lawyers appointed by the Agent on such matters
      concerning the laws of the Marshall Islands and Liberia, and such other
      relevant jurisdictions as the Agent may
require.

            

    

     

    
      	
              11

            	
              If
      the Agent so requires, in respect of any of the documents referred to
      above, a certified English translation prepared by a translator approved
      by the Agent.

            

    

     

    PART
B

     

    The
following are the documents referred to in Clause 9.1(b).

    

    
      	
              1

            	
              Documentary
      evidence that:

            

    

     

    
      	
              (a)

            	
              each
      Initial Ship is definitively and permanently registered in the name of its
      Owner under the applicable Approved
Flag;

            

    

     

    
      	
              (b)

            	
              each
      Initial Ship is in the absolute and unencumbered ownership of its Owner
      save as contemplated by the Finance Documents to which that Owner is a
      party;

            

    

     

    
      	
              (c)

            	
              each
      Initial Ship maintains the highest available class with such first-class
      classification society which is a member of IACS as the Agent may approve
      free of all overdue recommendations and conditions of such classification
      society;

            

    

     

    
      	
              (d)

            	
              each
      Mortgage relative to an Initial Ship has been duly registered against that
      Initial Ship as a valid first preferred or, as the case may be, priority
      statutory mortgage in accordance with the laws of applicable Approved Flag
      State;

            

    

     

    
      	
              (e)

            	
              each
      Initial Ship is insured in accordance with the provisions of this
      Agreement and all requirements therein in respect of such insurances have
      been complied with; and

            

    

     

    
      	
              (f)

            	
              each
      Initial Ship is operating under the Initial Charterparty subject to that
      Ship.

            

    

     

    
      	
              2

            	
              A
      copy of the Management Agreement and a duly executed original of the
      Manager’s Undertaking in relation to each Initial
  Ship.

            

    

     

    
      	
              3

            	
              Copies
      of:

            

    

     

    
      	
              (a)

            	
              the
      document of compliance (DOC) and safety management  certificate
      (SMC) referred to in paragraph (a) of the definition of the ISM Code
      Documentation in respect of each Initial Ship and the applicable Approved
      Manager certified as true and in effect by the Owner of such Initial
      Ship;

            

    

     

    
      	
              (b)

            	
              the
      ISPS Code Documentation in respect of each Initial Ship and the Owner
      thereof certified as true and in effect by that Owner;
  and

            

    

     

    
      	
              (c)

            	
              the
      Initial Charterparties.

            

    

     

    
      	
              4

            	
              Two
      valuations (at the cost of the Borrower) of each Initial Ship addressed to
      the Agent, stated to be for the purpose of this Agreement and dated not
      earlier than 15 days before the Drawdown Date for the Initial Ships
      Advance, each from an Approved
Broker.

            

    

     

    
      	
              5

            	
              The
      audited annual consolidated accounts of the Group for the Financial Year
      ended 31 December 2006 together with a 3-year projection of the financial
      position of the Group (including, without limitation, profit and loss
      accounts, balance sheets and statements of cash flow) certified as to its
      correctness by the chief financial officer of the Borrower, such
      projection to be in a form satisfactory to the
  Agent.

            

    

     

    
      
         

      

      
        71

        
          

        

      

      
         

      

    

     

     

    
      	
              6

            	
              Favourable
      legal opinions from lawyers appointed by the Agent on such matters
      concerning the laws of the Marshall Islands and Liberia and such other
      relevant jurisdictions as the Agent may
require.

            

    

     

    
      	
              7

            	
              A
      favourable opinion (at the cost of the Borrower) from an independent
      insurance consultant acceptable to the Agent on such matters relating to
      the insurances of the Initial Ships as the Agent may
    require.

            

    

     

    
      	
              8

            	
              If
      the Agent so requires, in respect of any of the documents referred to
      above, a certified English translation prepared by a translator approved
      by the Agent.

            

    

     

    PART
C

    

    The
following are the documents referred to in Clause 9.1(c).

    

    “Relevant Ship” means, in
relation to a Future Ship Advance, the Future Ship which is to be part-financed
by that Advance.

    

    
      	
              1

            	
              A
      duly executed original of the Mortgage, the Deed of Covenant (if
      applicable), the General Assignment, the Future Ship Earnings Account
      Change and (if applicable) the Charterparty Assignment for the Relevant
      Ship (and of each document to be delivered under each of
      them).

            

    

     

    
      	
              2

            	
              Documentary
      evidence that:

            

    

     

    
      	
              (a)

            	
              the
      Relevant Ship has been unconditionally delivered to, and accepted by, the
      relevant Owner under the relevant MOA and the full purchase price payable
      under that MOA has been duly paid;

            

    

     

    
      	
              (b)

            	
              the
      Relevant Ship is definitively and permanently registered in the name of
      the relevant Owner under an Approved
Flag;

            

    

     

    
      	
              (c)

            	
              the
      Relevant Ship is in the absolute and unencumbered ownership of the
      relevant Owner save as contemplated by the Finance
    Documents;

            

    

     

    
      	
              (d)

            	
              the
      Relevant Ship maintains the highest available class with such first-class
      classification society which is a member of IACS as the Agent may approve
      free of all recommendations and conditions of such classification
      society;

            

    

     

    
      	
              (e)

            	
              the
      Mortgage relative to the Relevant Ship has been duly registered or
      recorded (as the case may be) against the Relevant Ship as a valid first
      priority or preferred ship mortgage in accordance with the laws of the
      relevant Approved Flag State; and

            

    

     

    
      	
              (f)

            	
              the
      Relevant Ship is insured in accordance with the provisions of this
      Agreement and all requirements therein in respect of insurances have been
      complied with.

            

    

     

    
      	
              3

            	
              A
      copy of the Management Agreement and a duly executed original of the
      Manager’s Undertaking in relation to the Relevant
  Ship.

            

    

     

    
      	
              4

            	
              Copies
      of:

            

    

     

    
      	
              (a)

            	
              the
      document of compliance (DOC) and safety management certificate (SMC)
      referred to in paragraph (a) of the definition of the ISM Code
      Documentation in respect of the Relevant Ship and the Approved Manager
      certified as true and in effect by the Owner of the Relevant Ship;
      and

            

    

     

    
      
         

      

      
        72

        
          

        

      

      
         

      

    

    

     

    
      	
              (b)

            	
              the
      ISPS Code Documentation in respect of the Relevant Ship and the Owner
      thereof certified as true and in effect by the relevant
    Owner.

            

    

     

    
      	
              5

            	
              Two
      valuations of the Relevant Ship and of all other Ships subject to a
      Mortgage at the relevant Drawdown Date, addressed to the Agent, stated to
      be for the purpose of this Agreement and dated not earlier than 30 days
      before the relevant Drawdown Date, each prepared (at the expense of the
      Borrower) by an Approved Broker in accordance with Clause 15.4 which shows
      the value of the Relevant Ship and each other Ship in an amount acceptable
      to the Agent.

            

    

     

    
      	
              6

            	
              Evidence
      satisfactory to the Agent that the Owner of the Relevant Ship remains a
      direct or indirect wholly-owned subsidiary of the
  Borrower.

            

    

     

    
      	
              7

            	
              A
      favourable legal opinion from lawyers appointed by the Agent on such
      matters concerning the laws of the Approved Flag State where the Relevant
      Ship is registered and such other relevant jurisdictions as the Agent may
      require.

            

    

     

    
      	
              8

            	
              A
      favourable opinion (at the cost of the Borrower) from an independent
      insurance consultant acceptable to the Agent on such matters relating to
      the insurances for the Relevant Ship as the Agent may
    require.

            

    

     

    
      	
              9

            	
              If
      the Agent so requires, in respect of any of the documents referred to
      above, a certified English translation prepared by a translator approved
      by the Agent.

            

    

     

    
      	
               
      

            	
              Every
      other copy document delivered under this Schedule shall be certified as a
      true and up to date copy by a director or the secretary (or equivalent
      officer) of the Borrower or any other person acceptable to the Agent in
      its sole discretion.

            

    

    
      
         

      

      
        73

        
          

        

      

      
         

      

    

    SCHEDULE
5

    

    TRANSFER
CERTIFICATE

    

    

    The
Transferor and the Transferee accept exclusive responsibility for ensuring that
this Certificate and the transaction to which it relates comply with all legal
and regulatory requirements applicable to them respectively.

    

    

    
      	
              To:

            	
              Bank
      of Scotland Plc. for itself and for and on behalf of the Borrower, each
      Security Party, the Security Trustee and each Lender, as defined in the
      Loan Agreement referred to below.

            

    

    

    [                                  ]

    

    
      	
              1

            	
              This
      Certificate relates to a Loan Agreement (the “Loan Agreement”) dated
      [l] 2007 and
      made between (1) Paragon Shipping Inc. as borrower (the “Borrower”), (2) the
      banks and financial institutions named therein as Lenders, (3) Bank of
      Scotland Plc. as Agent, (4) Bank of Scotland Plc. as Mandated Lead
      Arranger, (5) Bank of Scotland Plc. as Security Trustee (6) Bank of
      Scotland Plc. as Underwriter and (7) Bank of Scotland Plc. as Swap Bank in
      respect of a revolving credit facility of up to
    US$89,000,000.

            

    

     

    
      	
              2

            	
              In
      this Certificate:

            

    

     

    
      	
               
      

            	
              “the Relevant Parties”
      means the Agent, the Borrower, each Security Party, the Security Trustee,
      the Swap Bank and each Lender;

            

    

    

    
      	
               
      

            	
              “the Transferor” means
      [full name] of [lending office];

            

    

    

    
      	
               
      

            	
              “the Transferee” means
      [full name] of [lending office].

            

    

    

    
      	
               
      

            	
              Terms
      defined in the Loan Agreement shall, unless the contrary intention
      appears, have the same meanings when used in this
    Certificate.

            

    

    

    
      	
              3

            	
              The
      effective date of this Certificate is
      .........200    Provided that this
      Certificate shall not come into effect unless it is signed by the Agent on
      or before that date.

            

    

     

    
      	
              4

            	
              The
      Transferor assigns to the Transferee absolutely all rights and interests
      (present, future or contingent) which the Transferor has as Lender under
      or by virtue of the Loan Agreement and every other Finance Document in
      relation to [    ] per cent. of the Contribution
      outstanding to the Transferor (or its predecessors in title) which is set
      out below:

            

    

     

    
      	 	
               Contribution  
      

            	
              Amount
      transferred

            
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      

    

    
      	
              5

            	
              By
      virtue of this Transfer Certificate and Clause 26 of the Loan Agreement,
      the Transferor is discharged [entirely from its Commitment which amounts
      to $[          ]] [from
      [    ] per cent. of its Commitment, which percentage
      represents
      $[          ]] and the
      Transferee acquires a Commitment of
      $[              ].

            

    

     

    
      
         

      

      
        74

        
          

        

      

      
         

      

    

    

     

    
      	
              6

            	
              The
      Transferee undertakes with the Transferor and each of the Relevant Parties
      that the Transferee will observe and perform all the obligations under the
      Finance Documents which Clause 26 of the Loan Agreement provides will
      become binding on it upon this Certificate taking
  effect.

            

    

     

    
      	
              7

            	
              The
      Agent, at the request of the Transferee (which request is hereby made)
      accepts, for the Agent itself and for and on behalf of every other
      Relevant Party, this Certificate as a Transfer Certificate taking effect
      in accordance with Clause 26 of the Loan
  Agreement.

            

    

     

    
      	
              8

            	
              The
      Transferor:

            

    

     

    
      	
              (a)

            	
              warrants
      to the Transferee and each Relevant
Party:

            

    

     

    
      	
               
      

            	
              (i)

            	
              that
      the Transferor has full capacity to enter into this transaction and has
      taken all corporate action and obtained all consents which are in
      connection with this transaction;
and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              that
      this Certificate is valid and binding as regards the
      Transferor;

            

    

     

    
      	
              (b)

            	
              warrants
      to the Transferee that the Transferor is absolutely entitled, free of
      encumbrances, to all the rights and interests covered by the assignment in
      paragraph 4 above;

            

    

     

    
      	
              (c)

            	
              undertakes
      with the Transferee that the Transferor will, at its own expense, execute
      any documents which the Transferee reasonably requests for perfecting in
      any relevant jurisdiction the Transferee's title under this Certificate or
      for a similar purpose.

            

    

     

    9           The
Transferee:

     

    
      	
              (a)

            	
              confirms
      that it has received a copy of the Loan Agreement and each other Finance
      Document;

            

    

     

    
      	
              (b)

            	
              agrees
      that it will have no rights of recourse on any ground against either the
      Transferor, the Agent, the Security Trustee, the Swap Bank or any Lender
      in the event that:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      Finance Documents prove to be invalid or
  ineffective,

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      Borrower or any Security Party fails to observe or perform its
      obligations, or to discharge its liabilities, under the Finance
      Documents;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              it
      proves impossible to realise any asset covered by a Security Interest
      created by a Finance Document, or the proceeds of such assets are
      insufficient to discharge the liabilities of the Borrower or any Security
      Party under the Finance Documents;

            

    

     

    
      	
              (c)

            	
              agrees
      that it will have no rights of recourse on any ground against the Agent,
      the Security Trustee, the Swap Bank or any Lender in the event that this
      Certificate proves to be invalid or
ineffective;

            

    

     

    
      	
              (d)

            	
              warrants
      to the Transferor and each Relevant Party (i) that it has full capacity to
      enter into this transaction and has taken all corporate action and
      obtained all official consents
which

            

    

     

    
      
         

      

      
        75

        
          

        

      

      
         

      

    

    it
needs to take or obtain in connection with this transaction; and (ii) that this
Certificate is valid and binding as regards the Transferee; and

     

    
      	
              (e)

            	
              confirms
      the accuracy of the administrative details set out below regarding the
      Transferee.

            

    

     

    
      	
              10

            	
              The
      Transferor and the Transferee each undertake with the Agent and the
      Security Trustee severally, on demand, fully to indemnify the Agent and/or
      the Security Trustee in respect of any claim, proceeding, liability or
      expense (including all legal expenses) which they or either of them may
      incur in connection with this Certificate or any matter arising out of it,
      except such as are shown to have been mainly and directly caused by the
      gross and culpable negligence or dishonesty of the Agent's or the Security
      Trustee's own officers or
employees.

            

    

     

    
      	
              11

            	
              The
      Transferee shall repay to the Transferor on demand so much of any sum paid
      by the Transferor under paragraph 10 above as exceeds one-half of the
      amount demanded by the Agent or the Security Trustee in respect of a
      claim, proceeding, liability or expense which was not reasonably
      foreseeable at the date of this Certificate; but nothing in this paragraph
      shall affect the liability of each of the Transferor and the Transferee to
      the Agent or the Security Trustee for the full amount demanded by
      it.

            

    

     

    

    

    
      	
              [Name
      of Transferor]

               

              By:  

               

              Date:  

            	
              [Name
      of Transferee]

               

              By:

               

              Date:

            

    

                                                

    

    Agent

    

    Signed
for itself and for and on behalf of itself

    as
Agent and for every other Relevant Party

    

    BANK
OF SCOTLAND plc.

    

    By:

    

    Date:

    

    
      
         

      

      
        76

        
          

        

      

      
         

      

    

    

    Administrative
Details of Transferee

    

    

    Name
of Transferee:

    

    Lending
Office:

    

    Contact
Person

    (Loan
Administration Department):

    

    Telephone:

    

    Telex:

    

    Fax:

    

    Contact
Person

    (Credit
Administration Department):

    

    Telephone:

    

    Telex:

    

    Fax:

    

    Account
for payments:

    

    

    

    

    
      	
              Note:

            	
              This
      Transfer Certificate alone may not be sufficient to transfer a
      proportionate share of the Transferor's interest in the security
      constituted by the Finance Documents in the Transferor's or Transferee's
      jurisdiction.  It is the responsibility of each Lender to
      ascertain whether any other documents are required for this
      purpose.

            

    

    
      
         

      

      
        77

        
          

        

      

      
         

      

    

    

    SCHEDULE
6

     

    FORM
OF COMPLIANCE CERTIFICATE

     

    To:         Bank
of Scotland Plc.

    Pentland
House

    8
Lochside Avenue

    Edinburgh
EH12 9DJ

    Scotland

    [l] 200[l]

    

    Dear
Sirs,

    

    We
refer to a loan agreement dated [l] 2007 (the “Loan Agreement”) made between
(amongst others) yourselves and ourselves in relation to a revolving credit
facility of up to $89,000,000.

    

    Words
and expressions defined in the Loan Agreement shall have the same meaning when
used in this compliance certificate.

    

    We
enclose with this certificate a copy of the [audited]/[unaudited] consolidated
accounts for the Group for the [Financial Year] [3-month period] ended [l].  The
accounts (i) have been prepared in accordance with all applicable laws and GAAP
all consistently applied, (ii) give a true and fair view of the state of affairs
of the Group at the date of the accounts and of its profit for the period to
which the accounts relate and (iii) fully disclose or provide for all
significant liabilities of the Group.

    

    We
also enclose copies of the valuations of all the Fleet Vessels which were used
in calculating the Market Value Adjusted Total Assets of the Group as at [l].

    

    The
Borrower represents that no Event of Default or Potential Event of Default has
occurred as at the date of this certificate [except for the following matter or
event [set out all material
details of matter or event]].  In addition as of [l], the Borrower confirms
compliance with the financial covenants set out in Clause 12.4 of the Loan
Agreement for the 3 months ending as of the date to which the enclosed accounts
are prepared.

    

    We
now certify that, as at [l]:

    

    
      	
              (a)

            	
              the
      ratio of  EBITDA to Interest Expenses is [l]:[l];

            

    

     

    
      	
              (b)

            	
              the
      Market Value Adjusted Net Worth of the Group is $[l];

            

    

     

    
      	
              (c)

            	
              Liquid
      Assets available to the Group are $[l] in aggregate of
      which an aggregate amount of $[l] is standing to
      the credit of the Earnings
Accounts;

            

    

     

    
      	
              (d)

            	
              the
      Leverage Ratio is [l]:[l];

            

    

     

    
      	
              (e)

            	
              the
      Security Cover Percentage is [l] per cent;
      and

            

    

     

    
      	
              (f)

            	
              the
      Working Capital of the Group is [l].

            

    

     

    This
certificate shall be governed by, and construed in accordance with, English
law.

    

    

    ______________________________

    [l]

    Chief
Financial Officer of

    Paragon
Shipping Inc.

    
      
         

      

      
        78

        
          

        

      

      
         

      

    

    SCHEDULE
7

     

    MANDATORY
COST FORMULA

     

    
      	
              1

            	
              The
      Mandatory Cost is an addition to the interest rate to compensate Lenders
      for the cost of compliance with (a) the requirements of the Financial
      Services Authority (or any other authority which replaces all or any of
      its functions) or (b) the requirements of the European Central
      Bank.

            

    

     

    
      	
              2

            	
              On
      the first day of each Interest Period (or as soon as possible thereafter)
      the Agent shall calculate, as a percentage rate, a rate (the "Additional Cost Rate")
      for each Lender, in accordance with the paragraphs set out
      below.  The Mandatory Cost will be calculated by the Agent as a
      weighted average of the Lenders' Additional Cost Rates (weighted in
      proportion to the percentage participation of each Lender in the Loan) and
      will be expressed as a percentage rate per
  annum.

            

    

     

    
      	
              3

            	
              The
      Additional Cost Rate for any Lender lending from a lending office in a
      Participating Member State will be the percentage notified by that Lender
      to the Agent.  This percentage will be certified by that Lender
      in its notice to the Agent to be its reasonable determination of the cost
      (expressed as a percentage of that Lender’s participation in the Loan) of
      complying with the minimum reserve requirements of the European Central
      Bank in respect of loans made from that lending
  office.

            

    

     

    
      	
              4

            	
              The
      Additional Cost Rate for any Lender lending from a lending office in the
      United Kingdom will be calculated by the Agent as
  follows:

            

    

     

    
      	 
      	 
      	
              E x
0.01

            	 
      	
              per
      cent. per annum

            	 
      
	 
      	 
      	
              300

            	 
      	 
      

    

    

    Where:

     

    
      	
               
      

            	
              E

            	
              is
      designed to compensate Lenders for amounts payable under the Fees Rules
      and is calculated by the Agent as being the average of the most recent
      rates of charge supplied by the Lenders to the Agent pursuant to paragraph
      6 below and expressed in pounds per
£1,000,000.

            

    

     

    

    
      	
              5

            	
              For
      the purposes of this Schedule:

            

    

     

    
      	
              (a)

            	
              “Special Deposits” has
      the meaning given to it from time to time under or pursuant to the Bank of
      England Act 1998 or (as may be appropriate) by the Bank of
      England;

            

    

     

    
      	
              (b)

            	
              “Fees Rules” means the
      rules on periodic fees contained in the FSA Supervision Manual or such
      other law or regulation as may be in force from time to time in respect of
      the payment of fees for the acceptance of
  deposits;

            

    

     

    
      	
              (f)

            	
              “Fee Tariffs” means the
      fee tariffs specified in the Fees Rules under the activity group A.1
      Deposit acceptors (ignoring any minimum fee or zero rated fee required
      pursuant to the Fees Rules but taking into account any applicable discount
      rate);

            

    

     

    
      	
              (g)

            	
              “Participating Member
      State” means any member state of the European Union that adopts or
      has adopted the euro as its lawful currency in accordance with legislation
      of the European Union relating to European Monetary Union;
    and

            

    

     

    
      
         

      

      
        79

        
          

        

      

      
         

      

    

    

     

    
      	
              (h)

            	
              “Tariff Base” has the
      meaning given to it in, and will be calculated in accordance with, the
      Fees Rules.

            

    

     

    
      	
              6

            	
              If
      requested by the Agent, each Lender lending from a lending office in the
      United Kingdom shall, as soon as practicable after publication by the
      Financial Services Authority, supply to the Agent, the rate of charge
      payable by that Lender to the Financial Services Authority pursuant to the
      Fees Rules in respect of the relevant financial year of the Financial
      Services Authority (calculated for this purpose by that Lender as being
      the average of the Fee Tariffs applicable to that Lender for that
      financial year) and expressed in pounds per £1,000,000 of the Tariff Base
      of that Lender.

            

    

     

    
      	
              7

            	
              Each
      Lender shall supply any information required by the Agent for the purpose
      of calculating its Additional Cost Rate.  In particular, but
      without limitation, each Lender shall supply the following information in
      writing on or prior to the date on which it becomes a
    Lender:

            

    

     

    
      	
              (a)

            	
              the
      jurisdiction of its lending office;
and

            

    

     

    
      	
              (b)

            	
              any
      other information that the Agent may reasonably require for such
      purpose.

            

    

     

    Each
Lender shall promptly notify the Agent in writing of any change to the
information provided by it pursuant to this paragraph.

    

    
      	
              8

            	
              The
      rates of charge of each Lender lending from a lending office in the United
      Kingdom for the purpose of calculating E shall be determined by the Agent
      based upon the information supplied to it pursuant to paragraph 6 above
      and on the assumption that, unless a Lender notifies the Agent to the
      contrary, each Lender's obligations in relation to cash ratio deposits and
      Special Deposits are the same as those of a typical bank from its
      jurisdiction of incorporation with a lending office in the same
      jurisdiction as its lending office.

            

    

     

    
      	
              9

            	
              The
      Agent shall have no liability to any person if such determination results
      in an Additional Cost Rate which over or under compensates any Lender and
      shall be entitled to assume that the information provided by any Lender
      pursuant to paragraphs 3, 6 and 7 above is true and correct in all
      respects.

            

    

     

    
      	
              10

            	
              The
      Agent shall distribute the additional amounts received as a result of the
      Mandatory Cost to the Lenders on the basis of the Additional Cost Rate for
      each Lender based on the information provided by each Lender pursuant to
      paragraphs 3, 6 and 7 above.

            

    

     

    
      	
              11

            	
              Any
      determination by the Agent pursuant to this Schedule in relation to a
      formula, the Mandatory Cost, an Additional Cost Rate or any amount payable
      to a Lender shall, in the absence of manifest error, be conclusive and
      binding on all parties.

            

    

     

    The
Agent may from time to time, after consultation with the Borrower and the
Lenders, determine and notify to all parties any amendments which are required
to be made to this Schedule in order to comply with  any change in
law, regulation or any requirements from time to time imposed by the Financial
Services Authority or the European Central Bank (or, in any case, any other
authority which replaces all or any of its functions) and any such determination
shall, in the absence of manifest error, be conclusive and binding on all
parties

    
      
         

      

      
        80

        
          

        

      

      
         

      

    

    

    

    SCHEDULE
8

     

    DESIGNATION
NOTICE

     

    

    To:       Bank
of Scotland

    Pentland House,

    8 Lochside Avenue,

    Edinburgh, EH12 9DJ,

    Scotland

    

    

     [l]

    

    Dear
Sirs

    

    Loan
Agreement dated [l]
2007 made between (inter alia) (i) ourselves as Borrower, (ii) the Lenders,
(iii) yourselves as Agent, Mandated Lead Arranger, Underwriter and Security
Trustee and (iv) yourselves as Swap Bank (the “Loan Agreement”)

    

    We
refer to:

    

    
      	
              1

            	
              the
      Loan Agreement;

            

    

     

    
      	
              2

            	
              the
      Master Agreement dated [l] made between
      ourselves and [l];
    and

            

    

     

    
      	
              3

            	
              a
      Confirmation delivered pursuant to the said Master Agreement dated [l] and addressed by
      [l] to
      us.

            

    

     

    In
accordance with the terms of the Loan Agreement, we hereby give you notice of
the said Confirmation and hereby confirm that the Transaction evidenced by it
will be designated as a “Designated Transaction” for the purposes of the Loan
Agreement and the Finance Documents.

    

    Yours
faithfully,

    

    

    

    

    

    .................................................

    for
and on behalf of

    PARAGON
SHIPPING INC.  

    
      
         

      

      
        81

        
          

        

      

      
         

      

    

    

    SCHEDULE
9

    REDUCTION
OF LOAN

     

    
      	 
      	
              Reduction
      Date

              (months
      after Reduction Start Date)

            	
              Amount
      of Reduction

              ($)

            	
              Maximum
      Available Amount of Loan

              ($)

            
	 
      	
              0

            	
              0

            	
              89,000,000

               

            
	
              1.

            	
              3

            	
              2,250,000

            	
              86,750,000

               

            
	
              2.

            	
              6

            	
              2,250,000

            	
              84,500,000

               

            
	
              3.

            	
              9

            	
              2,250,000

            	
              82,250,000

               

            
	
              4.

            	
              12

            	
              2,250,000

            	
              80,000,000

               

            
	
              5.

            	
              15

            	
              2,250,000

            	
              77,750,000

               

            
	
              6.

            	
              18

            	
              2,250,000

            	
              75,500,000

               

            
	
              7.

            	
              21

            	
              2,250,000

            	
              73,250,000

               

            
	
              8.

            	
              24

            	
              2,250,000

            	
              71,000,000

               

            
	
              9.

            	
              27

            	
              2,250,000

            	
              68,750,000

               

            
	
              10.

            	
              30

            	
              2,250,000

            	
              66,500,000

               

            
	
              11.

            	
              33

            	
              2,250,000

            	
              64,250,000

               

            
	
              12.

            	
              36

            	
              2,250,000

            	
              62,000,000

               

            
	
              13.

            	
              39

            	
              562,500

            	
              61,437,500

               

            
	
              14.

            	
              42

            	
              562,500

            	
              60,875,000

               

            
	
              15.

            	
              45

            	
              562,500

            	
              60,312,500

               

            
	
              16.

            	
              48

            	
              562,500

            	
              59,750,000

               

            
	
              17.

            	
              51

            	
              562,500

            	
              59,187,500

               

            
	
              18.

            	
              54

            	
              562,500

            	
              58,625,000

               

            
	
              19.

            	
              57

            	
              562,500

            	
              58,062,500

               

            
	
              20.

            	
              60

            	
              562,500

            	
              57,500,000

               

            
	
              21.

            	
              60

            	
              57,500,000

            	
              0

            

    

    

    

    
      
         

      

      
        82

        
          

        

      

      
         

      

    

    EXECUTION
PAGES

     

    

    
      	
              BORROWER

            	 
      	 
      
	 
      	 
      	 
      
	
              SIGNED
by

            	
              )

            	 
      
	
              for
      and on behalf of

            	
              )

            	 
      
	
              PARAGON
      SHIPPING INC.

            	
              )

            	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              LENDERS

            	 
      	 
      
	 
      	 
      	 
      
	
              SIGNED
by

            	
              )

            	 
      
	
              for
      and on behalf of

            	
              )

            	 
      
	
              BANK
      OF SCOTLAND PLC.

            	
              )

            	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              SWAP
      BANK

            	 
      	 
      
	 
      	 
      	 
      
	
              SIGNED
by

            	
              )

            	 
      
	
              for
      and on behalf of

            	
              )

            	 
      
	
              BANK OF SCOTLAND PLC.

            	
              )

            	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              AGENT

            	 
      	 
      
	 
      	 
      	 
      
	
              SIGNED
by

            	
              )

            	 
      
	
              for
      and on behalf of

            	
              )

            	 
      
	
              BANK OF SCOTLAND PLC.

            	
              )

            	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              SECURITY
      TRUSTEE

            	 
      	 
      
	 
      	 
      	 
      
	
              SIGNED
by

            	
              )

            	 
      
	
              for
      and on behalf of

            	
              )

            	 
      
	
              BANK
      OF SCOTLAND PLC.

            	
              )

            	 
      

    

    

    

    

    
      
         

      

      
        83

        
          

        

      

      
         

      

    

    

    
      	
              MANDATED
      LEAD ARRANGER

            	 
      	 
      
	 
      	 
      	 
      
	
              SIGNED
by

            	
              )

            	 
      
	
              for
      and on behalf of

            	
              )

            	 
      
	
              BANK
      OF SCOTLAND PLC.

            	
              )

            	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              UNDERWRITER

            	 
      	 
      
	 
      	 
      	 
      
	
              SIGNED
by

            	
              )

            	 
      
	
              for
      and on behalf of

            	
              )

            	 
      
	
              BANK
      OF SCOTLAND PLC.

            	
              )

            	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              Witness
      to all the

            	
              )

            	 
      
	
              above
      signatures

            	
              )

            	 
      
	 
      	 
      	 
      
	
              Name:

            	 
      	 
      
	 
      	 
      	 
      
	
              Address:

            	 
      	 
      

    

    

    

    

    SK 25744 0001
876102

    
      
         

      

      
        84

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00141-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00141-of-00352.parquet"}]]