Document:

Loan Agreement dated June 9, 2005

 

Exhibit 4.24

THIS AGREEMENT is dated the 9th day of June Two Thousand Five and made

BETWEEN

	1.	 	EGNATIA BANK S.A., a Banking Corporation, having its registered office at 4, Danaidon Street,
Thessaloniki, Greece, acting for the purposes of this Agreement through its office at 116
Kolokotroni Street, Piraeus 185 35, Greece and

	2.	 	ADVENTURE FOUR S.A. a company duly incorporated under the laws of the Republic of The
Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Island,
Majuro, The Republic of the Marshall Islands

WHEREAS

At the request of the Borrower the Bank has agreed to advance a sum of up to United States Dollars
SEVEN MILLION (US$ 7,000,000) to the Borrower upon the terms and conditions hereinafter set forth.

IT IS HEREBY AGREED as follows:-

1. PURPOSE, DEFINITIONS AND INTERPRETATION

The purpose of the Loan shall be to make available to the Borrower an aggregate facility of up to
United States Dollars SEVEN MILLION (US$ 7,000,000) for the purpose of financing up to 64% of the
acquisition cost of the Vessel “SOUTH GLORY” tbr “FREE FIGHTER” described hereinbelow.

In this Agreement unless the context otherwise requires the following terms shall have the
following meanings:

“Agreed Rate” means a rate agreed between the Bank and the Borrower on the basis of which (instead
of LIBOR) the interest rate is determined pursuant to Clause 8.6. hereof

“Agreement” means this Loan Agreement and the documents referred to in Clause 12 hereof as well as
every other document from time to time executed to secure the Indebtedness.

“Applicable Interest Rate” means the rate of Interest as determined in Clause 8.1. hereof

“Bank” means EGNATIA BANK S.A. a company incorporated under the laws of Greece and having its
registered office at 4, Danaidon Street, Thessaloniki, Greece, acting for the purposes of this
Agreement through its office at 116 Kolokotroni Street, Piraeus 185 35, Greece or through any other
branch notified to the Borrower

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from time to time pursuant to Clause 24 and its successors and assignees and transferees.

“Banking Day” means a day on which banks in New York, London, Athens and Piraeus are open for
business. However in respect of a day on which a payment in Dollars is required to be made
hereunder to the Bank, Banking Day shall mean a day on which dealings in deposits in Dollars are
carried on in the London Interbank Market and on which banks are open for business in London, and
New York City.

“Borrower” means ADVENTURE FOUR S.A., a company duly incorporated under the laws of the Republic of
The Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Island,
Majuro, the Republic of the Marshall Islands

“Commitment” means the principal amount which the Bank has agreed to lend to the Borrower hereunder
as reduced by any relevant term of this Agreement.

“Corporate Guarantor(s)” means one or more legal entity(ies) nominated by the Borrower and accepted
by the Bank which may at any time guarantee the obligations of the Borrower under this Agreement
and/or those of the other Security Parties to the Bank and in the singular means any of them

“Default Rate” means the rate of Interest per annum determined in accordance with the provisions of
Clause 8.4 hereof

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

“Drawdown Date” means the date being a Banking Day falling not later than the Latest Permissible
Drawdown Date on which the Commitment is advanced or, as the context may require, is to be advanced
to the Borrower.

“Drawdown Notice” means a notice substantially in the form set out in the Schedule III attached
hereto.

“Earnings” means all earnings of the Vessel whatsoever, due or to become due to or for the account
of the Borrower at any time during the period commencing on the Drawdown Date and terminating on
the date upon which all moneys payable or to become payable under any of the Security Documents
shall have been paid and discharged in full, including all freight, hire and passage moneys,
compensation payable to any Security Party in the event of requisition of the Vessel for hire,
remuneration for salvage and towage services, demurrage and detention moneys, contributions of any
nature whatsoever in respect of general average, damages for breach (or payments for variation or
termination) of any charterparty or other contract for employment of the Vessel as well as all and
any sums recoverable under all the insurances of the Vessel including the insurances in respect of
loss of Earnings and/or any other losses and/or liabilities of any Security Party in respect of the
Vessel.

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

“Environmental Affiliate” means any person having a contractual relationship with any Security
Party or any other Relevant Party in connection with any Relevant Ship or her operation, or the
carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or
from the Relevant Ship.

“Environmental Approval” means any approval, licence, permit, exemption, or authorisation
applicable on any Relevant Ship under any applicable Environmental Law.

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

“Environmental Law” means all laws regulations conventions and agreements whatsoever applicable to
any Relevant Ship relating to pollution or protection of the human health or the environment
including without limitation the carriage of Materials of Environmental concern and actual or
threatened emissions, spills, releases or discharges of Materials of Environmental concern

“Event of Default” or “Default” means any of those events specified in Clause 14 hereof or in any
of the Security Documents.

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

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

	(b)	 	the expenses referred to in Clause 23.

	(c)	 	interest on all such losses, liabilities, costs, charges, expenses, damages and
outgoings from the date on which the same were suffered, incurred or paid by the Bank
until the date of receipt or recovery thereof at a rate per annum calculated in accordance
with Clause 8.4.

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“Flag State” means such state or territory nominated by the Borrower and accepted by the Bank under
the laws and flag of which the Vessel will be registered as Ship

“Group” means the Borrower, the Guarantors and all the companies managed by the Manager and/or
controlled by the Personal Guarantors

“Guarantor(s)” means the Corporate Guarantors and the Personal Guarantors and in the singular means
any of them;

“Indebtedness” means, at any time, the obligation for the payment of moneys to the Bank under any
Security Document and/or any instrument whether actual or contingent, and/or any other obligation
for the payment of moneys to the Bank under any other instrument and/or Agreement already entered
into or to be entered into between the Bank and any one of the Security Parties.

“Interest Payment Date” means in respect of the Loan or any part thereof, in respect of which a
separate Interest Period is fixed, the last day of the relevant Interest Period and in case of any
Interest Period which overruns three (3) months the last day also of each such three (3) month
period(s).

“Interest Period” means any period for the calculation of interest in respect of the Loan
determined pursuant to Clauses 8.2. hereof.

“ISM Code” means the International Safety Management Code (including the guidelines on its
implementation), adopted by the International Maritime Organization Assembly as Resolutions A.
741(18) and A. 788 (19), as the same may be amended or supplemented from time to time. The terms
“Safety Management System”, “Safety Management Certificate”, “Document of Compliance” and “Major
Non-Conformity” shall have the same meanings as are given to them in the ISM Code.

“ISPS Code” means the International Code for the Security of Ships and of Port Facilities
(including Appendixes) adopted by one of the resolutions that were adopted on 12 December 2002 by
the Conference of Contracting Governments to the International Convention for the Safety of Life at
Sea 1974 (London, 9 to 13 December 2002) as the same may be amended or supplemented from time to
time.

“Latest Permissible Drawdown Date” means the 15th day of June 2005 being the latest date
for drawdown of the Loan pursuant to Clause 2 hereof or such later date as the Bank may agree in
writing.

“LIBOR” means, for an Interest Period:

(a) the rate per annum (rounded upwards, if necessary, to the nearest one-eighth of one per cent.)
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 Telerate Page 3750 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, “Telerate Page 3750” means the display designated
as “Page 3750” on the Telerate Service or such other page as may replace Page 3750 on that service
for the purpose of displaying rates comparable to that rate or on

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such other service as may be nominated by the British Bankers’ Association as the information
vendor for the purpose of displaying British Bankers’ Association Interest Settlement Rates for
Dollars); or

(b) if no rate is quoted on Telerate Page 3750, the rate per annum determined by the Bank to be the
arithmetic mean (rounded upwards, if necessary, to the nearest one-eighth of one per cent.) of the
rates per annum notified by the Bank as the rate at which deposits in Dollars are offered by
leading banks to other 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;

“Loan” means the aggregate principal amount owing to the Bank hereunder at any time.

“Manager” means FREE BULKERS S.A. a company duly incorporated under the laws of the Republic of The
Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Island,
Majuro, the Republic of the Marshall Islands, established in Greece under law 89/67 with an office
at 93, Akti Miaouli street , 185 38 Piraeus, Greece.

“Margin” means 1.875% (one point eight seven five percent) per annum.

“Material Adverse Effect” means a material adverse effect on any Security Party’s ability to meet
its obligations to the Bank under any of the Security Documents.

“Material of Environmental Concern” means any object or material which may cause environmental
damage, including pollutants, contaminants, toxic substances, oil as defined in the United States
Oil Pollution Act of 1990 and all hazardous substances as defined in the United States
Comprehensive Environmental Response, Compensation and Liability Act 1988

“Minimum Value” means, at any time, an amount equal at least to a percentage of one hundred and
forty per cent (140%) of the Indebtedness.

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

“Operating Account” means the account opened or to be opened by the Borrower with the Bank as per
Clause 16.3 hereof to which (inter alia) all Earnings of the Vessel are to be paid in accordance
with Clause 16.3.

“Personal Guarantor(s)” means one or more persons to be approved by the Bank in its absolute
discretion who have, or as the context may require, shall or may at any time execute a Personal
Guarantee and/or (where the context permits) any

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other person who shall give to the Bank a guarantee and/or indemnity for the due repayment of all
or part of the Indebtedness and in the singular means any of them

“Relevant Jurisdiction” means any jurisdiction in which or where any Security Party is
incorporated, resident, domiciled, has a permanent establishment, carries on, or has a place of
business or is otherwise effectively connected;

“Relevant Party” means the Borrower, the Guarantors and the Manager.

“Relevant Ship” means the Vessel and any other vessels from time to time owned by, managed by,
crewed by or chartered to any Relevant Party (whether before or after the date of this Agreement).

“Repayment Dates” means each of the dates for the payment of the Repayment Instalment sums falling
at three monthly intervals and commencing three months after the Drawdown of the Commitment up to
and including the date falling 36 Months after the Drawdown Date pursuant to Clause 7 hereof.

“Repayment Instalment” means each instalment payable pursuant to Clause 7 hereof.

“Retention Account” means the account opened or to be opened by the Borrower with the Bank as per
Clause 16.4 of this Agreement

“Security Documents” means this Agreement, the documents referred to in Clause 12 hereof and
any other document from time to time executed to secure the Indebtedness.

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

“Shareholder” means the corporate shareholder of the Borrower declared to the Bank prior to the
execution hereof and as represented to the Bank in the Certificate of legal shareholding given to
the Bank pursuant to Schedule I Part 1

“Subsidiary” at any time, means any entity of which more than fifty percent (50%) of the
outstanding voting stock or other equity interest entitled ordinarily to vote in the election of
the directors or other governing body (however designated) of that entity is at the time
beneficially owned or controlled directly or indirectly by the Borrower, by one or more such
entities or by the Borrower and one or more such entities.

“Taxes” includes all present and future taxes and all stamp and other taxes and levies, imposts,
deductions, duties, charges and withholdings whatsoever and public charges in general together with
interest thereon fines and penalties with respect thereto, if any, (except taxes on the net income
of the Bank imposed in the jurisdiction in which its principal or its lending office is located)
and charges, fees or other amounts made on or in respect thereof.

“Total Loss” means (a), actual, constructive, compromised or arranged total loss of the Vessel; or
(b) compulsory acquisition, or capture, seizure, or confiscation of the Vessel by any government or
person acting or purporting to act on behalf of

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any government or, (c) arrest, blockade, detention or simple loss of Vessel’s possession or use
because of any other reason. For the purpose of this Agreement a Total Loss shall be deemed to have
occurred:

	(a)	 	in case of an actual total loss at the actual date and time the Vessel was lost or if such
date is not known on the date on which the Vessel was last reported;
	 
	(b)	 	in the case of constructive on compromised or arranged total loss at the date and time notice
of abandonment of the Vessel is given to her insurers;
	 
	(c)	 	in the case of capture, seizure, confiscation or compulsory acquisition on the date of such
occurrence, unless it is reasonably expected that the Vessel will be soon restored absolutely
free to the Borrower always provided however that in fact she will be so restored within sixty
(60) days thereafter at the latest.
	 
	(d)	 	in the case of detention, arrest, blockade or loss of Vessel’s possession and/or use because
of any reason whatsoever upon the date of such occurrence, unless it is reasonably expected
that the Vessel will be soon restored absolutely free to the Borrower, always provided however
that in fact she will be so restored within sixty (60) days thereafter at the latest.

“Vessel” means m/v “SOUTH GLORY” tbr “FREE FIGHTER” owned by the Borrower, registered under Panama
flag with Official No ........... of gross registered tons 23696 and net registered tons 14790, built in
1982 in Varna, Bulgaria, IMO No 8027755, Inter. Call Sign ........ .

In this Agreement

	(a)	 	unless the context otherwise requires, words denoting the singular number shall include the
plural and vice versa;
	 
	(b)	 	references to persons include bodies corporate, bodies unincorporate and individuals.
	 
	(c)	 	references to assets include property, rights and assets of every description;
	 
	(d)	 	references to any document are to be construed as references to such document as amended or
supplemented from time to time; and
	 
	(e)	 	references to any enactment include re-enactments, amendments and extensions thereof.

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2. DISBURSEMENT

	2.1.	 	Amount

Subject to the terms and conditions of the Security Documents and in reliance on the
representations and warranties made in or in accordance with them the Bank agrees to make available
to the Borrower the sum of US Dollars SEVEN MILLION (US$ 7,000,000) for the purpose described in
Clause 1.

	2.2.	 	Drawdown

Subject to the terms and conditions of this Agreement the Commitment shall be made available to the
Borrower following receipt by the Bank from the Borrower of:

	(a)	 	a Drawdown Notice in the form set out in Schedule III not later than 10 a.m. two (2) Banking
Days before the proposed Drawdown Date of the Commitment.
	 
	(b)	 	confirmation of the terms of the proposed Insurances (as defined in the Schedule II) and
notification of the identities and of the names of the insurers and of the proposed
Classification Society not later than 10 a.m. two (2) Banking Days before the proposed
Drawdown Date.
	 
	(c)	 	the documents and evidences referred to in Schedule I (Conditions Precedent).

The giving of the Drawdown Notice shall constitute Borrower’s irrevocable commitment to borrow the
amount referred to therein.

	2.3.	 	Termination of Commitment

Any part of the Commitment remaining undrawn at the end of the Latest Permissible Drawdown Date
shall thereupon be automatically cancelled.

	2.4.	 	Number of Advances

The Commitment shall be advanced to the Borrower in full in one amount on the Drawdown Date.

3. CONDITIONS PRECEDENT

	3.1.	 	Corporate Documents and Evidences

The obligation of the Bank to make the Commitment available shall be subject to the condition that:

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	(a)	 	the Bank shall have received, not later than three Banking Days before the day on which the
Drawdown Notice for the Commitment is given, the documents and evidence specified in Part 1 of
Schedule I in form and substance satisfactory to the Bank;
	 
	(b)	 	the Bank shall have received, not later than three Banking Days before the day on which the
Drawdown Notice for the Commitment is given, or when this is not possible, simultaneously with
such drawdown, the documents and evidence specified in Part 2 of Schedule I in form and
substance satisfactory to the Bank;

	3.2.	 	Continuing conditions precedent

The obligation of the Bank to advance the Commitment, is subject to the further condition that at
the time of giving a Drawdown Notice and on advancing the Commitment no Event of Default has
occurred or is about to occur and be continuing. Also that the Arrangement Fee referred to in
Clause 5 hereto has been received by the Bank.

	3.3.	 	General Conditions

The obligation of the Bank to advance the Commitment shall be subject to the further condition that
the Bank at the time of receiving a Drawdown Notice in respect of the Commitment shall have
received.

	(a)	 	confirmations from Insurance Brokers and Club Managers that the Vessel will be fully
insured on the Drawdown Date in accordance with the requirements in Clause 4.3. (e) and that
the Bank’s interest as Mortgagee is duly noted.
	 
	(b)	 	the Security Documents duly executed and when appropriate duly registered with the
appropriate registry (save for the Mortgage which, if not delivered upon drawdown, will be
delivered to the Bank simultaneously with its registration).
	 
	(c)	 	evidence that the Operating Account and the Retention Account have been duly opened and all
mandate forms, signature cards and authorities have been duly executed and delivered to the
Bank.
	 
	(d)	 	There has been no material adverse change in the financial condition and operation of the
Security Parties or in their ability to perform their obligations under the Security Documents
to which they are a party or a material adverse change of circumstances.

	3.4.	 	Further Documents

The Bank may from time to time request and the Borrower shall, within the period specified by the
Bank, deliver to the Bank such further documents, certificates and/or opinions as requested at the
sole discretion of the Bank.

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	3.5.	 	Waiver of conditions precedent

The conditions specified in this Clause 3 are inserted solely for the benefit of the Bank. In case
any conditions precedent have not been fulfilled prior to the drawdown, the Bank may at its option,
without prejudice to its right not to make available the Commitment and/or to terminate same, grant
to the Borrower a few days period to fulfil such missing conditions precedent.

4. REPRESENTATIONS AND WARRANTIES

	4.1.	 	Continuing representations and warranties

The Borrower represents and warrants to the Bank that:

	(a)	 	Due incorporation.
	 
	 	 	each of the Security Parties are duly incorporated and validly existing in good standing
under the laws of their Relevant Jurisdictions and have power to carry on their
businesses as they are now being conducted and to own their property and other assets;
	 
	(b)	 	Corporate power
	 
	 	 	the Borrower has power to borrow the Commitment and the Borrower and each of
the other Security Parties has power to execute and deliver and perform its
obligations under the Security Documents to which it is or is to be a party; all
necessary corporate, shareholder and other action has been taken to authorise the
execution, delivery and performance of the same.
	 
	(c)	 	Binding obligations
	 
	 	 	the Security Documents constitute or will, when executed, constitute valid
and legally binding obligations of the relevant Security Parties enforceable in
accordance with their respective terms;
	 
	(d)	 	No conflict with other obligations
	 
	 	 	the execution and delivery of, the performance of their obligations under, and compliance
with the provisions of the Security Documents by the relevant Security Parties will not
(i) contravene any existing applicable law, statute, rule or regulation or any judgment,
decree or permit to which any of the Security Parties is subject, (ii) conflict with, or
result in any breach of any of the terms of, or constitute a default under, any agreement
or other instrument to which any of the Security Parties is a party or is subject or by
which it or any of its property is bound.
	 
	(e)	 	No litigation
	 
	 	 	there are no claims or actions pending or to the knowledge of any officer of the Security
Parties, threatened and no litigation, arbitration or administrative proceeding is taking
place, pending or, to the knowledge of any officer of the Security Parties, is threatened
against any of such Parties and/or Subsidiaries, which, if adversely determined could
have a Material Adverse Effect or could affect the validity or enforceability of any of
the Security Documents.

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	(f)	 	No filings required
	 
	 	 	save for the registration of the Mortgage under the laws of the relevant Flag State, it
is not necessary to ensure the legality, validity, enforceability or admissibility in
evidence of any of the Security Documents, that they or any other instrument be, filed,
registered or enrolled in any court, public office or elsewhere or that any tax be paid
in any Relevant Jurisdiction on or in relation to the Security Documents and/or to their
enforcement.
	 
	(g)	 	Choice of law
	 
	 	 	the choice of English law to govern the Security Documents, except the Mortgage which is
governed by the law of the flag of the Vessel, the Personal Guarantees and the Pledge
which are governed by the laws of Greece, and the submission by the Security Parties to
the non-exclusive jurisdiction of the Courts of Piraeus are valid and binding;
	 
	(h)	 	No immunity
	 
	 	 	none of the Security Parties is entitled to immunity on the grounds of sovereignty or
otherwise from any legal action or proceeding (which shall include, without limitation,
suit, attachment prior to judgement, execution or other enforcement) and in case any such
immunity will be granted to them the Security Parties concerned will unreservedly waive
as against the Bank all their respective rights and/or entitlement to such immunity.
	 
	(i)	 	Consents obtained
	 
	 	 	every consent, licence or approval of, or registration with or declaration to, public
bodies or authorities or courts required by any Security Party in connection with the
execution, delivery, validity, enforceability or admissibility in evidence of each of the
Security Documents or the performance by each Security Party of its obligations under the
Security Documents has been obtained or made and is in full force and effect;
	 
	(j)	 	Certification of beneficial shareholding
	 
	 	 	all of the shares in each of the Corporate Security Parties are beneficially owned by the
persons set out in the Certificate of beneficial shareholding to be delivered to the
Bank.
	 
	(k)	 	Financial statements
	 
	 	 	The financial statements of the Security Parties which have been or will be delivered to
the Bank are complete and accurate, have been prepared in accordance with generally
accepted principles of good accounting practice and fairly present the financial
condition of the Security Parties as at the date thereof and the results of their
operations.
	 
	(1)	 	No adverse changes
	 
	 	 	There has been no material adverse change in the financial condition of the Security
Parties or in their ability to perform their obligations under the Security Documents
since the date of the above financial statements.

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	4.2.	 	Further Representations and Warranties

The Borrower further represents and warrants to the Bank that:

	(a)	 	No default under any Indebtedness
	 
	 	 	none of the Security Parties nor any of their Subsidiaries are (nor would with
the giving of notice or lapse of time or the satisfaction of any other condition be)
in breach of or in default under the present or any other agreement relating to
indebtedness to which they are a party or by which they may be bound;
	 
	(b)	 	Information
	 
	 	 	the information, exhibits and reports furnished by any Security Party to the Bank are
true and accurate in all material respects, do not omit material facts and all reasonable
enquiries have been made to verify the facts and statements contained therein;
	 
	(c)	 	No Taxes
	 
	 	 	no Taxes e.t.c. are imposed by withholding or otherwise on any payment to be made by any
Security Party under the Security Documents or are imposed on or by virtue of the
execution or delivery by the Security Parties of the Security Documents or any other
document or instrument to be executed or delivered under any of the Security Documents;

	4.3.	 	Representations concerning the Vessel

	(a)	 	The Borrower will be on the Drawdown Date and during the life of this Agreement the sole
legal owner of the Vessel.
	 
	(b)	 	The Vessel will conform to existing international regulations, and will be registered as Ship
under the laws and flag of her Flag State.
	 
	(c)	 	Neither the Vessel, nor her Earnings or Insurances nor any part thereof will, on the drawdown
of the Commitment, or thereafter during the course of this Agreement, be subject to any
Encumbrances other than Encumbrances in favour of the Bank, neither to any participation
entitlement of any other except the Borrower.
	 
	(d)	 	The Borrower shall keep the Vessel insured at all times during the Loan period, while
navigating or in port, to the Bank’s full satisfaction. Such insurances shall be in form and
substance satisfactory to the Bank and with Underwriters acceptable to it in accordance with
the provisions of Schedule II and shall include as a minimum:

	 	i.	 	Hull and Machinery (disbursements and/or an increased value sum
insured) for an amount not less than the market value of the Vessel and in any case
not less than 125% of the amount of the Loan.
	 
	 	ii.	 	War Risks for the above amount.
	 
	 	iii.	 	Protection and Indemnity (with FD and D cover).
	 
	 	iv.	 	Mortgagee’s Interest Insurance (MII) to be effected and maintained by
the Bank at Borrower’s expense for an amount not less than 110% of

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	 	 	 	the amount of the Loan.
	 
	 	v.	 	Mortgagee’s Additional Perils (Pollution) (MAPI) (if required by the Bank
at its sole discretion) to be effected and maintained by the Bank on account of the
Bank at Borrower’s expense for an amount not less than 110% of the amount of the Loan

	(e)	 	there are and there will be no commissions, rebates, premiums or other repayments by or to or
on account of the Borrower, any other Security Party other than as disclosed to the Bank by
the Borrower in writing.
	 
	4.4.	 	(a)Compliance with Environmental Laws and Approvals

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

	 	(i)	 	the Borrower, the Corporate Guarantors and the other Relevant Parties and
to the best of the Borrower’s knowledge and belief their respective Environmental
Affiliates have complied, and will comply during the tenure of this Agreement with
the provisions of all Environmental Laws applicable at any area the Vessel is
sailing in or anchored at.
	 
	 	(ii)	 	the Borrower and the other Relevant Parties and to the best of the
Borrower’s knowledge and belief their respective Environmental Affiliates have
obtained all Environmental Approvals and are and will be during the tenure of this
Agreement in compliance with all such Environmental Approvals; and
	 
	 	(iii)	 	neither the Borrower, nor the Corporate Guarantors, nor any other
Relevant Party nor to the best of the Borrower’s knowledge and belief any of their
respective Environmental Affiliates has received notice of any Environmental Claim
that the Borrower or any other Relevant Party or any such Environmental Affiliate is
not in compliance with any Environmental Law or any Environmental Approval;

	(b)	 	No Environmental Claims
	 
	 	 	except as may already have been disclosed by the Borrower and acknowledged in writing by
the Bank, there is no Environmental Claim pending or, to the best of the Borrower’s
knowledge and belief, threatened against the Borrower or the Vessel or any other Relevant
Party or any other Relevant Ship or to the best of the Borrower’s knowledge and belief
any of their respective Environmental Affiliates;
	 
	(c)	 	The Borrower shall not trade within any area if they do not comply with all Environmental
Laws applicable in that area, and that they shall require that none of their Environmental
Affiliates trade within any area if the Environmental Affiliate cannot or does not comply with
all Environmental Laws applicable in that area which relate to the Vessel or her operation or
her carriage of cargo;
	 
	(d)	 	The Borrower shall upon the request of the Bank, conduct and complete all reasonably
necessary investigations, studies, sampling, audits and

13

 

	 	 	testing required in connection with any known (or threatened) Release of Materials of
Environmental Concern which would have a Material Adverse Effect; and
	 
	(e)	 	The Borrower shall, promptly upon the occurrence of any of the following events, provide to
the Bank a certificate specifying in detail the nature of such event and the proposed response
of the Borrower or the Environmental Affiliate concerned:

	 	(i)	 	the receipt by the Borrower or any Environmental Affiliate of any
Environmental Claim which would have a Material Adverse Effect; or
	 
	 	(ii)	 	any (or any threatened) Release of Materials of Environmental
Concern which would have a Material Adverse Effect,

	 	 	and upon the written request by the Bank, the Borrower shall submit to the Bank, at
reasonable intervals, a report updating the status of any occurrence of an Environmental
Claim or a Release of Materials of Environmental Concern, which would have a Material
Adverse Effect.

	4.5.	 	ISM Code

As regards the Vessel, and as from the date of her delivery to the Borrower, the Borrower shall
procure that the Manager shall:

	(a)	 	at all times comply, and be responsible for compliance by itself and by the Vessel, with the
ISM Code;
	 
	(b)	 	at all times ensure that:

	 	(i)	 	the Vessel has a valid Safety Management Certificate;
	 
	 	(ii)	 	the Vessel is subject to a safety management system which complies with
the ISM Code; and
	 
	 	(iii)	 	it has a valid Document of Compliance on board the Vessel to which the
Documents of Compliance relates,

and shall deliver to the Bank a copy of a valid Safety Management Certificate and a valid Document
of Compliance in respect of the Vessel in each case duly certified by a lawyer or a duly authorised
representative of the Borrower;

	(c)	 	promptly notify the Bank of any actual or threatened withdrawal of an applicable Safety
Management Certificate or Document of Compliance;
	 
	(d)	 	promptly notify the Bank of the identity of the person ashore designated for the purposes of
paragraph 4 of the ISM Code and of any change in the identity of that person; and

14

 

	(e)	 	promptly notify the Bank of the occurrence of any accident or major non-conformity requiring
action under the ISM Code.

	4.6.	 	ISPS Code

As regards the Vessel, and as from the date of her delivery to the Borrower, the Borrower shall:

	(a)	 	at all times comply, and be responsible for compliance by the Vessel with the ISPS Code;
	 
	(b)	 	at all times ensure that:

	 	(i)	 	the Vessel has a valid Ship Security Certificate;
	 
	 	(ii)	 	the Vessel is subject to a security system and any associated security
equipment of the Vessel which complies with the ISPS Code; and
	 
	 	(iii)	 	it has an approved Ship Security Plan on board the Vessel

and shall deliver to the Bank a copy of a valid Ship Security Certificate in respect of the Vessel
duly certified by an officer of the Borrower;

4.6. Repetition of representations and warranties

On the Drawdown Date and on each Interest Payment Date the Borrower unless it states otherwise in
writing to the Bank, shall be deemed to further represent and warrant to the Bank (a) that the then
latest audited and/or not audited (as the case may be) financial statements delivered to the Bank
have been prepared in accordance with generally accepted accounting principles and practices which
have been consistently applied and present fairly and accurately the financial position of the
Borrower and the Corporate Guarantors as at the end of the financial period to which the same
relate and the results of its operations and, as at the end of such financial period, the Borrower
and the Corporate Guarantors did not have any significant liabilities (contingent or otherwise) or
any unrealised or anticipated losses which are not disclosed by, or reserved against or provided
for in, such financial statements and (b) that the representations and warranties contained in
Clauses 4.1. to 4.5. are true and correct on and as of the Drawdown Date and on each Interest
Payment Date, as if each representation and warranty was made at such time.

5. ARRANGEMENT FEE

	5.1.	 	Arrangement Fee

The Borrower shall pay to the Bank a non-refundable Arrangement Fee in the amount of United States
Dollars fifty six thousand (US$ 56,000), payable on the date of execution of this Agreement.

15

 

5.2. The above Fee shall be payable to the Bank whether or not any part of the Commitment is ever
advanced.

6. EVIDENCE

It is hereby agreed that abstracts or photocopies or other reproductions of the Loan account and/or
from the books and/or records of the Bank certified by an officer of the Bank as well as statements
of accounts or a certificate signed by two authorised officers of the Bank shall be, in the absence
of a manifest error, conclusive evidence and binding on the Borrower and on the other Security
Parties as to the existence and/or the amount of the Indebtedness, of any amount due under this
Agreement, of the applicable Interest Rate or Default Rate or any other rate referred to in this
Agreement, the Interest Period, the value of additional securities under Clause 13.5., the payment
or non payment of any amount and/or the occurrence of any other Event of Default.

7. REPAYMENT

The Borrower hereby absolutely and unconditionally covenants and agrees to repay the Loan to the
Bank in freely transferable Dollars by twelve (12) consecutive quarterly repayment instalments, the
first two (2) of such instalments of Dollars one million (US$ 1,000,000) each, followed by four (4)
instalments of Dollars seven hundred fifty thousand (US$ 750,000) each, followed by six (6)
instalments of Dollars two hundred fifty thousand (US$ 250,000) each, plus a balloon payment (the
“Balloon Payment”) of Dollars five hundred thousand (US$ 500,000) payable together with the last
(12th) instalment.

The time, the amount and the balance of the Loan following the payment of each such instalment are
specified for convenience purposes in Schedule IV. Each such instalment together with interest as
hereinafter set forth shall be correspondingly payable on each of the Repayment Dates the first of
such Repayment Dates being the day falling three Months after the Drawdown Date of the Commitment
and each of the subsequent Repayment Dates falling at consecutive intervals of three (3) Months
thereafter as aforesaid.

The Final Repayment Date of the Loan shall be the day falling 36 Months after the Drawdown Date of
the Commitment and it must coincide with the last day of the final Interest Period to be adjusted
accordingly. If any part of the Commitment is not advanced to the Borrower the amount of the
Repayment Instalments and the Balloon Instalment shall be reduced pro rata.

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8. INTEREST AND INTEREST PERIODS

	8.1.	 	Interest Rate

The Borrower shall pay on each Interest Payment Date interest on the Loan (or as the case may be on
each portion thereof to which a different Interest Period relates) at the rate applicable in
respect of each Interest Period. Interest shall accrue on the Loan (or as the case may be on each
portion thereof to which a different Interest Period relates) during each Interest Period from and
including the first day of that Interest Period, to but excluding the last day thereof. The rate of
the interest shall be the rate per annum determined by the Bank to be the aggregate of (a) the
Margin and (b) the LIBOR unless there is an Agreed Rate in which case the rate for the calculation
of interest shall be the rate per annum determined by the Bank to be the aggregate of: (a) the
Margin and (b) the Agreed Rate.

	8.2.	 	Interest Period

The Borrower may by written notice to be received by the Bank not later than 10 a.m. on the second
Banking Day before the beginning of each Interest Period specify whether such next Interest Period
shall have a duration of one(1) or three (3) Months subject to the availability which shall be
determined solely by the Bank

	8.3.	 	Determination of Interest Periods

Every Interest Period shall be of the duration specified by the Borrower pursuant to Clause 8.2.
but so that:

	(a)	 	the initial Interest Period shall commence on the Drawdown Date of the Commitment and each
subsequent Interest Period shall commence on the last day of the immediately preceding
Interest Period.
	 
	(b)	 	if the last Interest Period would overrun the Final Repayment Date, such Interest Period
shall end on such Repayment Date. Should an Interest Period determined in accordance with the
provisions of this Clause overrun one or more Repayment Dates, so many additional Interest
Periods will be specified as the number of the Repayment Dates being overrun by the above
Interest Period. Each of such additional Interest Periods will be of a duration ending at the
corresponding Repayment Date and for an amount equal to the instalment due on such Date, while
the above overrunning Interest Period shall be for the remaining balance of the Loan after the
deduction of the amount(s) of the additional Interest Period(s) ending on the Repayment
Date(s) falling within the said overrunning Interest Period.
	 
	(c)	 	if the Borrower fails to specify the duration of an Interest Period in accordance with the
provisions of Clause 8.2. and this Clause 8.3. such Interest Period shall have a duration of
three Months or such other period as shall comply with this Clause 8.3.;
	 
	(d)	 	if the Bank determines that the duration of an Interest Period specified by the Borrower in
accordance with Clause 8.2. is not readily available, then

17

 

	 	 	that Interest Period shall have such duration as the Bank after having consulted with the
Borrower may determine.

	8.4.	 	Default Rate

If the Borrower fails to pay any sum (including, without limitation, any sum payable pursuant to
this Clause 8.4.) on its due date for payment under any of the Security Documents, the Borrower
shall pay interest on such sum (Default Rate) from the due date up to the date of actual payment
(as well after as before judgment) at a rate determined by the Bank to be the aggregate of (a) two
per cent (2%) per annum, (b) the Margin and (c) the LIBOR for periods of not less than one (1)
Month duration or for periods of such longer duration as the Bank from time to time may designate.
The first of the above periods shall commence on the due date for payment, while each one of the
subsequent periods shall commence on the last day of the preceding such period. Such interest shall
be compounded and shall be due and payable on the last day of each such period as determined by the
Bank and each such day shall, for the purposes of this Agreement, be treated as an Interest Payment
Date. If, for the reasons specified in Clause 8.6.(a), the Bank is unable to determine a rate in
accordance with the foregoing provisions of this clause, interest on any sum not paid on its due
date for payment shall be calculated at a rate determined by the Bank to be two per cent (2%) per
annum above the aggregate of the Margin and the cost of funds to the Bank.

	8.5.	 	Notification

The Bank shall notify the Borrower of the duration of each Interest Period and of each rate of
interest determined by it under this Clause 8.

	8.6.	 	Non availability

	(a)	 	If and whenever, at any time prior to the commencement of any Interest Period, the Bank shall
have determined any of the following facts (which determination in the absence of manifest
error shall be conclusive):

	 	(i)	 	that adequate and fair means do not exist for ascertaining LIBOR during
such Interest Period; or
	 
	 	(ii)	 	that deposits in Dollars are not available to the Bank in the London
Interbank Market in the ordinary course of business in sufficient amounts it is
impracticable for the Bank to fund or to continue to fund the Loan in Dollars.
	 
	 	(iii)	 	that LIBOR for that Interest Period will not adequately reflect the cost
of funding the Loan for that Interest Period.

the Bank shall forthwith give notice (a “Determination Notice”) thereof to the Borrower. A
Determination Notice shall contain particulars of the relevant circumstances giving rise to its
issue. After the giving of any Determination Notice the undrawn amount of the Commitment shall
not be borrowed until notice to the contrary is given to the Borrower by the Bank.

18

 

	(b)	 	During the period of 30 days after any Determination Notice has been given by the
Bank under Clause 8.6.(a), the Bank shall certify an alternative basis (the “Substitute
Basis”) for maintaining the Loan. The Substitute Basis may (without limitation) include
alternative interest periods, alternative currencies or alternative rates of interest but
shall include a margin above the cost of funds to the Bank equivalent to the Margin. Each
Substitute Basis so certified shall be binding upon the Borrower and shall take effect in
accordance with its terms from the date specified in the Determination Notice until such
time as the Bank notifies the Borrower that none of the circumstances specified in
Sub-clause 8.6.(a) continues to exist whereupon the normal interest rate fixing provisions
of the Agreement shall apply.
	 
	(c)	 	In any event, during the thirty (30) days following the giving of a Determination
Notice, the Borrower and the Bank shall negotiate in good faith in order to arrive at the
Substitute Basis for the Bank to fund or continue to fund the Loan (or the relevant part
thereof) during such Interest Period. If within such thirty (30) day period the
Substitute Basis to fund or to continue to fund the Loan (or the relevant part thereof) is
agreed upon, then such Substitute Basis shall take effect in accordance with its terms.
If the Borrower and the Bank fail to agree on such Substitute Basis within such thirty
(30) day period and such circumstances are continuing at the end of such thirty day
period, then the Bank shall set a Substitute Basis as per Clause 8.6. (b). If the
circumstance shall continue at the end of such interest period, the procedure in this
Clause 8.6 (c) shall be repeated. If the Borrower shall not agree with such rate then the
Borrower may give not less than fifteen (15) Business Days irrevocable notice of
prepayment to the Bank in which case the commitment hereunder of the Bank shall thereupon
be cancelled and, if the Loan is outstanding, the Borrower shall prepay the Loan on the
first Business Day after such period in accordance with the terms of this Agreement and
the obligations of the Bank shall thereupon terminate.

9. PREPAYMENT

	9.1.	 	Voluntary Prepayment

	(a)	 	The Borrower may prepay part or all of the Loan at any Interest Payment Date relating to the
whole of the Loan provided that they will have given a ten (10) days prior written notice to
the Bank, specifying the amount to be prepaid on such date, in one or integral multiples of
the instalment amount.

	(b)	 	The Borrower may also at any other time prepay the Loan or a part thereof upon ten (10) days
prior written notice provided that it will also prepay all sums that the Bank shall determine
to be its loss and cost sustained because of the prepayment within an Interest Period or
Periods including but not limited to payment of interest breakage costs (if any) and of such
additional amounts (if any) to compensate the Bank for the cost of redeploying funds as a
result of such prepayment as well as any loss of Interest up to the end

19

 

		 	of the then current Interest Period or Periods in respect of the whole amount of the Loan
outstanding

	(c)	 	In the case of a prepayment due to a refinancing from another bank or financial institution
during the first year of the term of the Loan Agreement an amount of 1% shall be paid to the
Bank on any amounts prepaid.

	9.2.	 	Conditions

All prepayments shall be conditional to the prior fulfilment of the following prerequisites:

	9.2.1.	 	The interest accrued to the Loan to the date of prepayment and any other additional sums due
hereunder and/or under any of the other Security Documents will be paid to the Bank.
	 
	9.2.2.	 	Every notice of prepayment shall be effective on actual receipt by the Bank, shall be
irrevocable, shall oblige the Borrower to make such prepayment on the date specified and shall
specify the amount to be prepaid, which shall be not less than the sum of an instalment amount
or a higher integral multiple thereof. Any amount so prepaid may not be re-borrowed under this
Agreement.
	 
	9.2.3.	 	Any prepayment on Interest Payment Dates of less than the whole of the Loan will be applied
by the Bank towards repayment of the Repayment Instalments and the Balloon Payment in inverse
order of their maturity.

	9.3.	 	Compulsory Prepayment

The Borrower shall,

(a) in case the Vessel becomes a Total Loss, within one hundred fifty days (150) therefrom, or

(b) in case

     (i) the Vessel is sold, or

     (ii) it becomes illegal for the Bank to lend or maintain the Commitment,
on demand prepay the Loan together with accrued interest to the date of prepayment and all other
sums payable by the Borrower to the Bank pursuant to this Agreement and the other Security
Documents (and if the Commitment has not been drawn yet, it shall be reduced to zero), unless the
Bank agrees (in case of 9.3.(a) and/or 9.3.(b) (i)) to accept substitute security in form and
substance satisfactory to the Bank, in line with Clauses 13.5.2 and 13.5.3 hereof,

10. PAYMENTS ACCOUNTS & CALCULATIONS

	10.1.	 	Not set off or counterclaim and no deductions

	(a)	 	The Borrower acknowledges that in performing its obligations under this Agreement, the Bank
will be incurring liabilities to third parties in relation

20

 

	 	 	to the funding of amounts to the Borrower, such liabilities matching the liabilities of
the Borrower to the Bank and that it is reasonable for the Bank to be entitled to receive
payments from the Borrower gross on the due date in order that the Bank is put in a
position to perform its matching obligations to the relevant third parties. Accordingly,
all payments to be made by the Borrower under any of the Security Documents shall be made
in full, without any set-off or counterclaim whatsoever and free and clear of any
deductions or withholdings, in Dollars on the due date (for value on the day on which
payment is due) to the account of the Bank (with a direct tested telex advise to the
Bank) or to such other account at such other bank in such place as the Bank may from time
to time specify for this purpose.
	 
	(b)	 	If at any time the Borrower is required to make any deduction or withholding in respect of
Taxes or otherwise from any payment due under any of the Security Documents the sum due from
the Borrower in respect of such payment shall be increased to the extent necessary to ensure
that after the making of such deduction or withholding the Bank receives on the due date for
such payment a net sum equal to the sum which it would have received had no such deduction or
withholding been required to be made. The Borrower shall indemnify the Bank against any losses
or costs incurred by the Bank by reason of any failure of the Borrower to make any such
increased payment to the Bank on account of any deduction or withholding or by reason of any
increased payment not being made on the due date for such payment. The Borrower shall within
15 days after each deduction forward to the Bank official receipts and any other proof
evidencing the amounts paid or payable in respect of any deduction or withholding as
aforesaid. The obligations of the Borrower under this provision shall remain in force
notwithstanding the repayment of the Loan.
	 
	(c)	 	Payments by the Borrower shall be considered to be made as of the date on which the Bank
receives correctly authenticated advice of the credit of such account provided that such
advice is received at a time of day when the Bank is able in accordance with its usual
practice to process and utilize such funds on such day, failing which such payment shall be
considered to be made as of the next Banking Day following receipt of such advice.

	10.2.	 	Payments by the Bank

All sums to be advanced by the Bank to the Borrower under this Agreement in respect of the Loan
shall be remitted in Dollars on the Drawdown Date to the account specified in the Drawdown Notice.

	10.3.	 	Calculation

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

21

 

11.
UNLAWFULNESS AND INCREASED COSTS

	11.1.	 	Unlawfulness
	 
	(a)	 	If it is or becomes contrary to any law or regulation for the Bank to disburse the Loan or to
maintain the Commitment or the Loan, or to fund the Loan or to claim or receive any amount
payable to it hereunder, the Bank shall give notice to the Borrower whereupon (a) the
Commitment shall be reduced to zero and (b) the Borrower shall be obliged to prepay the Loan
either forthwith or on a future specified date not being later than the latest date permitted
by the relevant law or regulation, or, if such date is not provided, within 40 days from the
notice of the Bank, together with interest accrued to the date of prepayment and all other
sums payable by the Borrower under the Security Documents.
	 
	(b)	 	If circumstances arise which would result in a Notification under Clause 11.1. then, without
in anyway limiting the rights of the Bank under Clause 11.1., the Bank shall use reasonable
endeavours to transfer each obligations, liabilities and rights under the Security Documents
to another office or financial institution not affected by the circumstances.
	 
	11.2.	 	Increased Cost

If, as a result of (a) any change in or in the interpretation of any law, regulation e.t.c. by any
governmental authority in any country the laws of which are applicable on the Bank, or (b)
compliance by the Bank with any requirement of any authority (whether or not having the force of
law) or any other set of circumstances including any type of liquidity, stock, reverse asset or
capital adequacy controls or other banking or monetary controls or requirements connected with the
manner in which the Bank allocates capital resources to its obligations hereunder:

	(a)	 	The cost to the Bank of making available the Commitment or maintaining or funding the Loan is
increased; or
	 
	(b)	 	The amount payable to the Bank or the effective return to the Bank under any of the Security
Documents, is reduced; or
	 
	(c)	 	The basis of taxation of payments to the Bank of principal or of interest on any amounts
advanced by it is changed;

Then, unless the Borrower elects to prepay the Loan in accordance with Clause 9 hereof, or reduce
the Loan accordingly, the Bank will notify the Borrower in writing of any intention to claim
indemnification and such notification, made in line with the provision of Clause 6, which will be a
conclusive evidence binding on the Borrower as to the amount of any increased cost or reduction and
the method of calculating the same. Such claim may be made at any time and must be discharged by
the Borrower within fifteen (15) days of demand. It shall not be a defence to a claim by the Bank
hereunder that any increased cost or reduction could have been avoided by the Bank. Any amount due
from the Borrower hereunder shall be due as a separate debt and shall not be affected by judgement
being obtained for any

22

 

other sums due under or in respect of this Agreement or of any other Security Document.

12.
SECURITY

	12.1.	 	Security Documents

As security for the due repayment of all sums from time to time payable to the Bank, the Borrower
shall ensure and procure that the following Security Documents are duly executed and, where
required properly registered in favour of the Bank at the time specified herein or otherwise as
required by the Bank and ensure that such security, apart from this Agreement, consists of

	(a)	 	A duly registered First Priority Panamanian Maritime Mortgage over the Vessel providing on
the basis of the provisions of the applicable law the highest degree of security for the Bank
(the “Mortgage”);
	 
	(b)	 	A first priority General Assignment of all the Insurances (including the Mortgagee’s Interest
Insurance) and Earnings of the Vessel in form and substance satisfactory to the Bank and
notices of assignment and acknowledgments thereof (the “Assignment of Insurances and
Earnings”);
	 
	(c)	 	Specific Assignments of the benefit of all charters of more than twelve (12) Months duration
in respect of the Vessel and respective notices and acknowledgments thereof (the “Assignment
of Charter”)
	 
	(d)	 	A Corporate Guarantee from the Manager and each of the Corporate in form and substance
satisfactory to the Bank (the “Corporate Guarantee(s)”).
	 
	 	 	Guarantors The Corporate Guarantees will be given by the Corporate Guarantors others
than the Manager upon condition that they shall be activated and become effective only
in case that the Shareholder is not listed in the NASDAQ or the AMEX or any other major
U.S. Stock Exchange by the 30th September 2005.
	 
	(e)	 	A Personal Guarantee from each of the Personal Guarantors in
form and substance
satisfactory to the Bank (the “Personal Guarantee(s)”
	 
	 	 	The Corporate Guarantee of the Manager and the Personal Guarantees of the Personal
Guarantors will be replaced by a Manager’s Letter of Undertaking and a Corporate Guarantee
of the Shareholder when and in the case the Shareholder is listed in the NASDAQ or the
AMEX or any other major U.S. Stock Exchange.
	 
	(f)	 	A Pledge on the Retention Account in form and substance satisfactory to the Bank (the
“Pledge”);

23

 

13.
COVENANTS

The Borrower covenants with the Bank that, from the date of this
Agreement and as long as any sums are due and/or owing and/or outstanding under this Agreement or
any of the other Security Documents, the Borrower and/or any Security Party will:

	13.1.	 	Information Covenants
	 
	13.1.1.	 	Furnish the Bank, in form and substance satisfactory to the Bank, with annual, combined
financial statements of the Group within 120 days after the end of the financial year
concerned commencing as of 31st December 2004 prepared in accordance with generally accepted
accounting principles consistently applied;
	 
	13.1.2.	 	Provide the Bank from time to time as the Bank may reasonably request and in form and
substance satisfactory to the Bank with any information on the financial condition,
commitments and operations of the Group.
	 
	13.1.3.	 	Promptly inform the Bank of any occurrence which came to the knowledge of the Borrower
which might adversely affect the ability of the Borrower or any other Security Party to
perform their respective obligations under this Agreement and/or any of the other Security
Documents and of any Event of Default forthwith upon becoming aware thereof;
	 
	13.1.4.	 	Promptly inform the Bank of all major financial developments in the Group such as new
loans, refinancing/restructuring of existing loans, new acquisitions and sales, contracts for
any employment of vessels and for any other borrowed monies.
	 
	13.2.	 	Due Performance
	 
	13.2.1.	 	Use the Loan exclusively for the purpose specified in this Agreement;
	 
	13.2.2.	 	Ensure that all obligations under this Agreement and the other Security Documents will be
duly and punctually performed.
	 
	13.2.3.	 	Pay to the Bank on demand any sum of money which is payable to the Bank under this
Agreement and the other Security Documents but in respect of which it is not specified in any
other Clause when it is due and payable;
	 
	13.2.4.	 	Accept that a Certificate of the Bank or a statement of account executed by two authorised
officers of the Bank or an Extract of the Books of the Bank certified by an officer of the
Bank shall (save for manifest error) be conclusive evidence of the amount due under this
Agreement and shall be final and binding on all parties hereto;
	 
	13.2.5.	 	Upon request by the Bank from time to time provide such information and evidence to the
Bank as the Bank would require, demonstrating

24

 

	 	 	compliance with the covenants and warranties set forth in this Agreement and any other
Security Document.
	 
	13.3.	 	Financial Exposure
	 
	13.3.1.	 	Incur no further debt and grant no guarantee to and/or in favour of anybody without the
prior written consent of the Bank, except in the normal course of the Vessel’s operations.
	 
	13.3.2.	 	Not give any loans or credits or advances to any person, or entity without the prior
written consent of the Bank;
	 
	13.3.3.	 	Not declare or pay any dividends or other distribution without the prior written consent of
the Bank;
	 
	13.3.4.	 	Except as permitted by this Agreement and the other Security Documents not pay out any
funds to any company or person but only in connection with the administration of the Borrower,
the operation and/or the repair(s) of the Vessel;
	 
	13.3.5.	 	Not transfer, sell or otherwise dispose any of their real or personal property, assets or
rights, whether present or future, without the prior written consent of the Bank or allow any
part of its undertaking, property, assets or rights, whether present or future, to be
mortgaged, charged, pledged, used as a lien or otherwise encumbered without the prior written
consent of the Bank;
	 
	13.3.6.	 	Ensure that the Indebtedness of the Borrower and of any other Security Party to the Bank
hereunder will not be subordinated in priority of payment to any other present or future
claim. Clause 13.3.6. shall not apply to any Security Party which is a shipowner.
	 
	13.4.	 	Business and Corporate Structure
	 
	13.4.1.	 	Not change the nature, organisation and conduct of the business of the Borrower and/or any
other corporate Security Party as shipowners and/or managers of vessels as the case may be;
	 
	13.4.2.	 	Not merge or consolidate with any other company or other legal entity;
	 
	13.4.3.	 	On demand deliver or cause to be delivered to the Bank official certificates from the
relevant authority confirming that the Borrower and any other corporate Security Party is in
good standing in their countries of incorporation;
	 
	13.4.4.	 	Ensure that there is no change in the Directors and Officers of the Borrower and of any
other corporate Security Party and moreover ensure that no change shall be made directly or
indirectly in the ownership, beneficial ownership, control, management or business of the
Borrower or any other corporate Security Party without the prior written consent of the Bank.

25

 

	 	 	 	It is agreed between the parties to this Agreement, that the Shareholder may be
listed in the NASDAQ or the AMEX or any other major U.S. Stock Exchange. In case that
the Shareholder is listed in the NASDAQ or the AMEX or any other major U.S. Stock
Exchange a change may be made directly or indirectly in the beneficial ownership of the
Shareholder without the prior written consent of the Bank.

	13.5.	 	Obligation to maintain the Security Value
	 
	13.5.1.	 	At all times the Borrower will procure that the aggregate value of the Vessel as determined
in accordance with Clause 13.5.4. and other security to be granted to the Bank pursuant to
this Clause (the “Security Value”) is not less than the Minimum Value at any time.
	 
	13.5.2.	 	If the Security Value is less than the Minimum Value at any time the Borrower will within
40 days of a request by the Bank and in order to secure the Indebtedness on such terms as may
be acceptable to the Bank:

	 	i.	 	prepay a proportionate part of the Loan; and/or
	 
	 	ii.	 	procure for or grant to the Bank such other additional security as the
Bank shall expressly approve for the purpose of this Clause 13.5.
	 
	 	so that after such prepayment or grant of other security, the Security Value is not less
than the Minimum Value.
	 
	 	If the Security Value shall at any time exceed the Minimum Value, and the Borrower shall
have previously provided further security to the Bank pursuant to clause 13.5.2(ii), the
Bank shall, as soon as reasonably practicable after notice from the Borrower to do so and
subject to it being indemnified to its reasonable satisfaction against the cost of doing
so, release any such further security specified by the Borrower provided that the Bank is
satisfied that, immediately following such release, the Security Value will equal or
exceed the Minimum Value.

	13.5.3.	 	As far as Clause 13.5.2.(ii) is concerned :

	 	i.	 	cash provided by way of security shall be valued in Dollars at its
principal amount;
	 
	 	ii.	 	any other security shall be valued on such basis as the Bank shall
reasonably determine in its discretion from time to time; and
	 
	 	iii.	 	there shall be deducted from any value or valuation the amount which is
owing and might become owing and which is secured on the asset concerned by any
prior or equal ranking Security Interest (other than in favour of the Bank to secure
the Indebtedness).
	 
	 	iv.	 	cash deposits and/or any other security acceptable to the Bank it will be
provided in a way and manner also acceptable to the Bank.

26

 

	13.5.4.	 	At least once every year but not more than twice a year the Borrower undertakes to have at
its own cost the Vessel valued with or without physical inspection (as the Bank may require)
in Dollars, on the basis of sale for prompt delivery free of Encumbrances in favour of the
Bank for cash at arm’s length on normal commercial terms as between a willing seller and a
willing buyer by an independent shipbroker selected by or acceptable to the Bank and reporting
to the Bank. Such valuation shall be made on the basis of the value of the Vessel charter
free. The Borrower agrees to accept the valuation made as aforesaid as conclusive evidence of
the market value of the Vessel at the date of valuation. The Borrower will supply to the Bank
and to the above shipbrokers such information as such shipbrokers shall require.
	 
	13.6.	 	Covenants concerning the Vessel
	 
	13.6.1.	 	Ensure that the Vessel will maintain her present ownership, management, control and
ultimate beneficial ownership;
	 
	 	 	It is agreed between the parties to this Agreement, that the Shareholder may be
listed in the NASDAQ or the AMEX or any other major U.S. Stock Exchange . In case that
the Shareholder is listed in the NASDAQ or the AMEX or any other major U.S. Stock
Exchange a change may be made directly or indirectly in the beneficial ownership of the
Vessel
	 
	13.6.2.	 	Ensure that the Vessel is and will remain properly certified in respect with the ISM Code
and in compliance with the ISO 9001 and the ISPS code when applicable and moreover that the
Vessel shall be classed +100A1 or to a similar standard with Lloyds Register of Shipping, or a
classification society member of IACS and that the Vessel will remain in class free of all
overdue recommendations, notations or average damage affecting class and provide the Bank on
demand with copies of all ISM, ISPS and/or all class and/or trading certificates of the
Vessel.
	 
	13.6.3.	 	Ensure that at all times the Vessel is managed by the Manager or by such company as may be
approved in writing by the Bank and that such company is and will remain ISM certified and
that it shall maintain at all times an organisation and personnel which in the reasonable
opinion of the Bank is adequate to provide sufficient management, agency, financial,
secretarial and other services for the Vessel.
	 
	13.6.4.	 	Maintain all Insurances of the Vessel and comply with all insurance requirements specified
in this Agreement (including in particular Schedule II) and in case they fail to maintain the
Vessel and/or such other property so insured, the Borrower hereby, for the purpose of serving
the interest of the Bank, irrevocably authorises the Bank and grant to it the right to effect
the insurances of the Vessel and/or of the property as provided for in Schedule II in the
amount and in terms acceptable to the Bank from time to time at the cost and on behalf of the
Borrower. The Bank will have the right but not the obligation to effect all or any of such
insurances at the

27

 

	 	 	cost of the Borrower and such cost shall consist Expenses in the meaning of the Clause 1;
	 
	13.6.5.	 	Supply copies of all cover notes, certificates of entry, insurance policies and documents
and furnish details of all insurances contemplated by Schedule II and/or contracted to the
Bank. The Bank may submit all such insurance documents for examination to an insurance
consultant nominated by the Bank. The Bank will be at liberty to reasonably decide on the
adequacy and the compliance of the cover with the provisions of the Security Documents
including Schedule II and its decision shall be final and binding on the Borrower. The cost
including Value Added Tax of such insurance consultant shall be considered as Expenses;
	 
	13.6.6.	 	Promptly provide a consultant nominated and appointed by the Bank to monitor the collection
of claims of whatsoever nature with whatever information and documentation the Bank shall
require. All the cost including Value Added Tax in respect of the appointment of such
consultant shall be considered as Expenses;
	 
	13.6.7.	 	Not grant or permit any charge lien or other Encumbrance to be imposed upon the Vessel or
otherwise dispose of any of their rights under any charterparty or contract of affreightment
relating to the Vessel or any other earnings of the Vessel;
	 
	13.6.8.	 	Ensure that the Vessel is maintained and trades in conformity with the laws of her flag, of
her owning company or of the nationality of the officers, or crew, and in conformity with the
requirements of the Insurances and nothing is done or permitted to be done which could
endanger the flag of the Vessel, or her free ownership and operation or her Insurances;
	 
	13.6.9.	 	Always comply with all the covenants provided for in the Mortgage;
	 
	13.6.10.	 	Not without the prior written consent of the Bank enter into a charterparty, contract of
affreightment, agreement or related document in respect of the employment of the Vessel (i)
for a period of more than twelve (12) Months or (ii) below the market rate prevailing at the
time when the Vessel is fixed in or on terms which are not in accordance with the commercial
practice prevailing at the relevant time or (iii) on demise charterparty;
	 
	13.6.11.	 	Execute and deliver to the Bank within fifteen (15) days of signing of any charter, the
duration of which is to be for a period, directly or by extension of more than twelve (12)
Months, (a) a specific assignment of such charter in form and substance satisfactory to the
Bank and (b) a notice of any such assignment addressed to the relevant charterer and endorsed
with an acknowledgement of receipt by the relevant charterer all in form and substance
satisfactory to the Bank;
	 
	13.6.12	 	Carry out all banking operations in connection with the Vessel through the Bank’s Piraeus
Branch

28

 

	13.6.13	 	Maintain with the Bank’s Piraeus Branch average credit balances of USD 500,000 (including
any amounts standing to the credit of the Retention Account)
	 
	13.6.14.	 	Notify the Bank forthwith:
	 
	(a)	 	of any Environmental Claim for an amount exceeding USD 200,000 made against either Vessel
and/or the Borrower and/or any Security Party.
	 
	(b)	 	upon becoming aware of any incident which may give rise to an Environmental Claim and to keep
the Bank advised in writing of the owners’ response to such Environmental Claim on such
regular basis and in such detail as the Bank shall require.
	 
	(c)	 	The Vessel is and will be during the life of this Agreement operationally seaworthy and in
every way fit for service.
	 
	13.7.	 	Alternative Security
	 
	 	 	Ensure and procure that in the event, that the Shareholder is listed in the NASDAQ or
the AMEX or any other major U.S. Stock Exchange, the existing Corporate Guarantee given
by the Manager and the Personal Guarantees will be replaced by the following Security
Documents duly executed and, where required properly registered in favour of the Bank
at the time as required by the Bank as security for the due repayment of all sums from
time to time payable to the Bank
	 
	(a)   	 	Manager’s Letter of Undertaking in form and substance satisfactory to the Bank
	 
	(b)   	 	Corporate Guarantee of the Shareholder in form and substance satisfactory to the
Bank
	 
	13.8.	 	Validity of securities
	 
	13.8.1.	 	Ensure and procure that all approvals or consents and/or any other steps required for the
validity, enforceability and legality of this Agreement and the other Security Documents and
for the performance thereof by the Borrower and any other Security Party are appropriately
taken and are maintained in full force and effect.
	 
	13.8.2.	 	Ensure and procure that, unless and until directed by the Bank otherwise (i) all the
Earnings of the Vessel shall be paid to the Operating Account and (ii) the persons from whom
the Earnings are from time to time due are irrevocably instructed to pay them to the Operating
Account in accordance with the provisions hereof and of the relevant Security Documents;
	 
	13.8.3.	 	Pay all Taxes, and other governmental charges when the same fall due, except to the extent
that the same are being contested in good faith by appropriate proceedings and adequate
reserves have been set aside for their payment if such proceedings fail;

29

 

	13.8.4.	 	From time to time at the request of the Bank execute and deliver to the Bank or procure the
execution and delivery to the Bank of all such documents as shall be deemed desirable at the
sole discretion of the Bank for giving full effect to this Agreement, and for perfecting,
protecting the value of or enforcing any rights or securities granted to the Bank under the
Security Documents and any other documents executed pursuant hereto or thereto.
	 
	13.8.5.	 	The covenants specified in this Clause are inserted solely for the benefit of the Bank and
may be waived in whole or in part and with or without conditions by the Bank without
prejudicing the right of the Bank to require fulfilment of such covenants at such time and
manner as specified by the Bank.
	 
	13.9.	 	Admission, and warranties of the Security Parties as regards their liability
	 
	(a)	 	The giving of the Corporate and the Personal Guarantee by the Guarantors is to the commercial
benefit of such Guarantors in that the Guarantors have close financial cooperation and mutual
assistance with the Borrower and that by lending their support to the Borrower through such
Guarantees they further their own business interests within the scope of their constitutional
documents;
	 
	(b)	 	The liability of the Borrower and of the other Security Parties shall in all cases, whether
so expressed to be or not, be joint and several and each representation and warranty and each
covenant and agreement made or given or to be made or given by any one of them will be
considered as made or given by them all jointly and severally;
	 
	(c)	 	The Borrower further represents that none of the Security Parties shall be exonerated and its
liability hereunder shall not be lessened or impaired by any time, indulgence or relief being
given by the Bank to any other Security Party or by the variation, compromise, renewal or
release of or refusal or neglect to perfect or enforce any right, remedies or securities
against any of the Borrower or any other Security Party, by anything done or omitted which but
for this provision might operate to exonerate any other Security Parties;
	 
	(d)	 	The obligations of the Borrower shall not be affected by any legal limitation, disability,
incapacity or other circumstances relating to any other Security Party, whether or not known
to the Bank, by any invalidity in or irregularity or unenforceability of the obligations of
such other Security Party under any of the Security Documents or otherwise or by any change in
the constitution of, or any amalgamation or reconstruction of any Security Party or of the
Bank.

14.
EVENTS OF DEFAULT

The following events shall constitute an Event of Default (whether or not caused by any reason
whatsoever outside the control of the Borrower or whether such Event

30

 

shall occur or come about by operation of Law or regulation or pursuant to, or in compliance with
any judgement, decree or order of any court or other authority):

	14.1.	 	Non Performance of Obligations
	 
	14.1.1.	 	If the Borrower and/or any other Security Party fail to pay any sum due hereunder and/or
under the other Security Documents when due, or in the case of any sum payable on demand,
within seven (7) Banking Days of such demand;
	 
	14.1.2.	 	If the Borrower and/or any other Security Party fail to obtain and/or maintain the
Insurances (as defined in Schedule II) or if any insurer in respect of such Insurances becomes
entitled to cancel the insurances or to disclaim liability;
	 
	14.1.3.	 	If the Borrower and/or any other Security Party default in the due performance and/or
observance of any covenant, term, obligation or undertaking under this Agreement and/or any of
the other Security Documents (other than those referred to in sub-Clauses 14.1.1. and 14.1.2.
hereinabove). In case such default is in the opinion of the Bank, capable of remedy, if it
will continue unremedied for fourteen (14) Banking Days after its occurrence.
	 
	14.2.	 	Representations incorrect

If any representation or warranty explicitly made or implied by or in respect of the Borrower
pursuant to the Security Documents proves to have been incorrect or misleading when made or at any
time during the currency of this Agreement.

	14.3.	 	Events affecting the Borrower and/or any other Security Party
	 
	14.3.1.	 	If a creditor of the Borrower or of any other Security Party attaches or takes possession
of, or a distress execution, sequestration or other process is levied or enforced upon or sued
against the whole or any part of the property of the Borrower and/or any other Security Party
and it is not discharged within fourteen (14) Banking days;
	 
	14.3.2.	 	If the Borrower and/or any other Security Party is found bankrupt or insolvent or any order
is made by any competent court or resolution passed by the Borrower and/or any other Security
Party or petition presented for the winding-up or dissolution of the Borrower and/or any other
Security Party or for the appointment of a liquidator, trustee, receiver, administrator or
conservator of any part of the undertakings, assets, rights or revenues of the Borrower and/or
any other Security Party;
	 
	14.3.3.	 	If the Borrower and/or any other Security Party suspend payment of their debts or are (or
are reasonably deemed to be) unable to or admit inability to pay their debts as they fall due
or propose or enter into any composition or other arrangement for the benefit of creditors
generally or proceedings

31

 

	 	 	are commenced in relation to the Borrower and/or any other Security Party relating to
reconstruction or readjustment of debts;
	 
	14.3.4.	 	If a meeting is convened by any corporate Security Party for the purpose of passing any
resolution to purchase, reduce or redeem any of its share capital;
	 
	14.3.5.	 	If a material part of the undertakings, assets, rights or revenues of the Borrower and/or
any other Security Party are seized, nationalised, expropriated or compulsorily acquired by or
under the authority of any government;
	 
	14.3.6.	 	If any event occurs or proceeding is taken with respect to the Borrower and/or any other
Security Party in any jurisdiction to which anyone of them is subject which has an effect
equivalent or similar to any of the events mentioned in Clauses 14.3.1. to 14.3.5.;
	 
	14.3.7.	 	If the Borrower and/or any other Security Party suspend or threaten to suspend or cease to
carry on its business;
	 
	14.3.8.	 	If there occurs, in the reasonable opinion of the Bank, a materially adverse change in the
financial condition of the Borrower and/or any Security Party;
	 
	14.3.9.	 	If any other event occurs not mentioned in this Clause 14.3. or circumstances arise which,
in the opinion of the Bank, is likely adversely to affect either (i) the ability of the
Borrower and/or any other Security Party to perform all or any of their obligations under or
otherwise to comply with the terms of this Agreement and/or any of the other Security
Documents, or (ii) the security created by this Agreement and/or any of the other Security
Documents;
	 
	14.3.10.	 	If there is any change in the beneficial ownership of the shares in the Borrower and/or
any other Security Party as declared to the Bank prior to the execution hereof or as
represented to the Bank in the Certificate of beneficial shareholding given to the Bank
pursuant to Schedule I, Part 1.
	 
	14.3.11.	 	If any of the individuals providing a Personal Guarantee to the Bank shall die and the
Borrower shall fail to provide (an) alternative guarantor(s) acceptable to the Bank in its
discretion within twenty one (21) days;
	 
	14.3.12.	 	If any of the events specified in Clauses 14.3.1. to 14.3.11 occurs (amended as
appropriate) with respect to any member of the Group which is not a Security Party and in the
reasonable opinion of the Bank the ability of the Security Parties (or any of them) to perform
all or any of their obligations under or otherwise to comply with the terms of this Agreement
and the other Security Documents may be materially and adversely affected thereby.
	 
	14.3.13.	 	If any debt of any Security Party is not paid when due or any debt of any Security Party
becomes due and payable prior to the date when it would otherwise have become due (unless as a
result of the exercise by the

32

 

	 	 	relevant Security Party of a voluntary right of prepayment), or any creditor of any
Security Party becomes entitled to declare its claim due and payable, or any facility or
commitment available to any Security Party is withdrawn, suspended or cancelled by
reason of any default (however described) of such Security Party;
	 
	14.4.	 	Events affecting the Security Documents
	 
	14.4.1.	 	If this Agreement or any of the other Security Documents shall at any time and for any
reason become invalid or unenforceable or otherwise cease to remain in full force and effect,
or if the validity or enforceability of any of the Security Documents shall at any time and
for any reason be contested by any party thereto (other than the Bank), or if any such party
shall deny that it has any, or any further, liability thereunder or shall otherwise repudiate
any of the Security Documents or do or cause or permit to be done any act or thing evidencing
an intention to repudiate this Agreement or any of the other Security Documents or it becomes
impossible or unlawful for the Borrower and/or any other Security Party to fulfil any of its
covenants and obligations contained in this Agreement or any of the other Security Documents
or for the Bank to exercise the rights or any of them vested in it thereunder or otherwise;
	 
	14.4.2.	 	If any Encumbrance in respect of any property or assets (or part thereof) which belong to
the Security Parties (or any of them) becomes enforceable.
	 
	14.5.	 	Events concerning the Vessel
	 
	14.5.1.	 	If the Vessel either:
	 
	(a)	 	becomes a Total Loss or
	 
	(b)	 	suffers damage or is involved in an accident which in the opinion of the Bank may result in
being subsequently considered to be a Total Loss or which may otherwise reduce the security of
the Bank.

and the Loan is not prepaid within one hundred fifty days (150) therefrom in accordance with Clause
9.3(a) of this Agreement.

	14.5.2.	 	If the registration of the Vessel under the laws and flag of the relevant Flag State is
cancelled or terminated without the prior written consent of the Bank.
	 
	14.5.3.	 	If the Flag State of the Vessel becomes involved in hostilities or civil war or there is a
seizure of power in such Flag State by unconstitutional means if, in any such case, such event
could in the opinion of the Bank reasonably be expected to have a material adverse effect on
the security constituted by any of the Security Documents;

33

 

	14.6.	 	Environmental Events

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

	14.7.	 	Consequences of Default
	 
	14.7.1.	 	At any time after the occurrence of any Event of Default, the Bank may, without prejudice
to any other of its rights,
	 
	(a)	 	by notice to the Borrower declare that the obligation of the Bank to make the Commitment
available shall be terminated, whereupon the Commitment shall be reduced to zero forthwith
and/or
	 
	(b)	 	by notice to the Borrower (the “Notice of Default”) declare that the Loan and interest and
all sums payable under this Agreement and the other Security Documents have become due and
payable, or payable on demand, whereupon the same shall immediately, or in accordance with the
terms of such notice, become due and payable jointly and severally by the Borrower and the
other Security Parties, without any further demand protest or notice or any other procedure
from the Bank,
	 
	(c)	 	put into force and exercise all or any of the rights, powers and remedies possessed by it
under this Agreement and/or under any other Security Document.
	 
	14.7.2.	 	If an event occurs in respect of the Borrower or any of the other Security Parties of the
type described in Clauses 14.3.2. to 14.3.6. (except in the case that such events mentioned in
Clause 14.3 relate to only a part of undertakings, assets, rights or revenues which in the
opinion of the Bank does not affect the ability of the Borrower and/or the Security Parties to
perform their obligations under this Agreement and/or the Security Documents) the obligation
of the Bank to make the Commitment available shall terminate immediately and all amounts under
sub-clause 14.7.1.(b) above shall become immediately due and payable without the need for any
demand from the Bank or any notice to the Borrower or other action of any kind whatsoever.

15. APPLICATION OF PROCEEDS OF SALE OR OF INSURANCE

All moneys received by the Bank under or pursuant to this Agreement and the other Security
Documents (but subject to and except as otherwise provided herein

34

 

or therein) shall be applied in the following manner or in such other manner as the Bank shall
decide:

	 	 	 
	FIRST

	 	in or towards the payment of Expenses and all sums
other than principal or interest which may be owing
to the Bank under this Agreement or the other
Security Documents
	 	 	 
	SECOND

	 	in or towards the payment of any arrears of interest owing to the Bank
hereunder
	 	 	 
	THIRD

	 	in or towards the payment of any other indebtedness
or sums of money due to the Bank under this Agreement
and/or the other Security Documents
	 	 	 
	FOURTH

	 	in or towards the repayment of the Loan (whether the same is due and payable or not)
	 	 	 
	FIFTH

	 	the balance (if any) shall be paid as the Borrower shall direct in writing to the Bank.

16. ACCOUNTS

	16.1.	 	Loan Account

The Bank shall maintain in accordance with its usual practice, an account evidencing the amounts
from time to time lent by, owing to and paid to it under the Security Documents. Such account
confirmed by the Bank as per Clause 6 hereof shall, be conclusive as to the amount from time to
time owing by the Borrower under the Security Documents.

	16.2.	 	Set-off

Upon the occurrence of any Event of Default, the Borrower authorises the Bank, without notice to
the Borrower, to apply any credit balance to which the Borrower is then entitled and/or to whatever
currency standing upon any such account of the Borrower with any branch of the Bank in or towards
satisfaction of the Indebtedness. For this purpose, the Bank is authorised to purchase with the
moneys standing to the credit of such account such other currencies as may be necessary to effect
such application. The Bank shall not be obliged to exercise any right given to it by this clause.
The Bank shall notify the Borrower without delay upon the exercise or purported exercise of any
right of set-off giving details in relation thereto.

	16.3	 	Operating Account
	 
	16.3.1.	 	The Borrower undertakes with the Bank that it will:

35

 

	(a)	 	on or before the Drawdown Date open with the Bank the Operating Account and
	 
	(b)	 	procure that all moneys payable to the Borrower in respect of the Earnings or other
receivables regarding the Vessel shall, unless and until the Bank directs to the contrary be
paid to the Operating Account free from Encumbrances (save for Encumbrances in favour of the
Bank); Provided however that if any moneys paid to the Operating Account are payable in a
currency other than Dollars, the Bank shall convert such moneys into Dollars at the Bank’s
spot rate of exchange at the relevant time for the purchase of Dollars with such currency and
the term “spot rate of exchange” shall include any premium and costs of exchange payable in
connection with the purchase of Dollars with such currency.
	 
	(c)	 	The Operating Account shall bear interest at the rate quoted by the Bank to its customers for
comparable deposits in Dollars and for such periods as the Bank may determine, such interest
to be credited to the Operating Account at intervals the Bank usually pays interest on
deposits.
	 
	(d)	 	The Borrower hereby assigns to the Bank as a continuing security for the payment of the
Indebtedness the Operating Account and all moneys from time to time standing to the credit
thereof including any interest from time to time accrued and accruing thereon, such assignment
to take effect immediately upon the occurrence of an Event of Default, but always subject to
the provision of Clause 16.3.3.(b).
	 
	16.3.2.	 	Withdrawals.
	 
	 	 	So long as no Default shall have occurred the Borrower shall be entitled to withdraw from the
Operating Account any amount. Provided however that if in the opinion of the Bank there will be
insufficient sums standing to the credit of the Operating Account to meet principal falling due on
the next Repayment Date or interest due on the next Interest Payment Date or any other moneys which
are due and payable to the Bank, the Bank shall be entitled to refuse any withdrawal from the
Operating Account.
	 
	16.3.3.	 	Application of Operating Account
	 
	(a)	 	The Bank shall be entitled (but not obliged) at any time to deduct from the balance for the
time being standing to the credit of the Operating Account all other moneys which may fall due
to be paid to the Bank under the terms of the Security Documents or otherwise howsoever in
connection with the Loan.
	 
	(b)	 	At any time after the occurrence of an Event of Default, the Bank may, without notice to the
Borrower, apply all moneys then standing to the credit of the Operating Account (together with
interest from time to time accruing or accrued thereon) in or towards satisfaction of any sums
due to the Bank under the Security Documents in the manner specified in Clause 15.

36

 

	16.3.4.	 	Relocation of Operating Account

The Borrower, at its own costs and expenses, undertakes to comply with any written requirement of
the Bank from time to time as to the location or relocation of the Operating Account and will from
time to time enter into such documentation as the Bank may require in order to create or maintain a
security interest in the Operating Account.

	16.4.	 	Retention Account
	 
	16.4.1.	 	The Borrower on or before the Drawdown Date will open with the Bank the Retention Account.
	 
	(a)	 	For so long as any moneys are owing under the Security Documents, the Borrower shall pay to
the Retention Account, at monthly intervals commencing with a first payment on the date
falling one Month after the Drawdown Date and at monthly intervals thereafter (each such day
being hereinafter called “Monthly Retention Date”) such sum (each sum being hereinafter called
“Monthly Retention Amount”) as shall be the aggregate of:

	 	i.	 	the quotient of the Repayment Instalment amount from time to time falling
due on the each time next Repayment Date divided by the number of the months
intervening between the immediately previous and the such next Repayment Date,
pursuant to Clause 7; and
	 
	 	ii.	 	the quotient of the amount of interest from time to time falling due in
respect of the Loan or each part thereof on the each time next Interest Payment Date
divided by the number of months of the relevant Interest Period.

	(b)	 	The Bank is hereby irrevocably authorised by the Borrower to debit at every Monthly Retention
Date the Operating Account with the Monthly Retention Amounts and to credit them to the
Retention Account.
	 
	(c)	 	In case that any Earnings paid to the Operating Account relate to a period of employment of
the Vessel longer than one (1) Month, then upon receipt of such Earnings the Retention Account
shall be funded by an amount equal to so many Monthly Retention Amounts or part thereof as
shall correspond to the longer period to which the said Earnings relate or any amount as may
be determined by the Bank.
	 
	16.4.2.	 	Unless and until there shall occur an Event of Default all Monthly Retention Amounts
credited to the Retention Account together with interest from time to time accruing or at any
time accrued thereon shall be set off and applied by the Bank (and express and irrevocable
authority is hereby given by the Borrower to the Bank so to set off and apply the same) upon
each Repayment Date and upon each Interest Payment Date in or towards payment of the Repayment
Instalment then falling due and/or (as the case may be) the amount of interest then due. Each
such set off

37

 

	 	 	and application by the Bank shall constitute a payment in or towards satisfaction of the
corresponding payment obligations of the Borrower under this Agreement but shall be
strictly without prejudice to the obligations of the Borrower to make any such payment to
the extent that the aforesaid set off application by the Bank is insufficient to meet the
same.
	 
	16.4.3.	 	Any amount for the time being standing to the credit of the Retention Account shall bear
interest at the rate quoted by the Bank to its customers for deposits in Dollars for such
period as the Bank may determine and for an amount comparable with the amount for the time
being standing to the credit of the Retention Account.
	 
	16.4.4.	 	Upon the occurrence of an Event of Default or at any time thereafter the Bank will set off
and apply all sums standing to the credit of the Retention Account including accrued interest
(if any) in the manner specified in Clause 15 without notice to the Borrowers.

17. INDEMNITY

	17.1.	 	Miscellaneous Indemnities

The Borrower will indemnify the Bank against any and all expenses, claims, losses or liabilities
sustained or incurred by the Bank as a result of

	(a)	 	the Loan not being drawndown hereunder whether before or after the giving of the Drawdown
Notice in accordance with the provisions of Clause 2.2. hereof for any reason whatsoever
including but not limited to the refusal of the Bank to allow the disbursement of the
Commitment because of the non fulfilment of the Conditions Precedent contained in Schedule I
or any of them
	 
	(b)	 	any default in payment by the Borrower of any sum under any of the Security Documents
	 
	(c)	 	the occurrence of any other Event of Default
	 
	(d)	 	the prepayment or repayment of the Loan or part thereof being made otherwise than on an
Interest Payment Date relating to the part of the Loan prepaid or repaid.

including in any such case, but not limited to, any loss or expense suffered as a result of
reemploying deposits acquired by the Bank (or any person to whom the Bank has sold a participation
in the Loan) for the purpose of funding the Loan at a rate of return lower than the cost of
acquiring the deposits or any expense incurred by the Bank (or such person) in liquidating the
deposits.

	17.2.	 	Currency

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If, any payment by any of the Security Parties under any of the Security Documents is made or falls
to be satisfied in a currency (the “payment currency”) other than the currency in which such
payment is due under or in connection with such Security Documents (the “contractual currency”),
then, to the extent that the amount of such payment actually received by the Bank, when converted
into the contractual currency at the rate of exchange, falls short of the amount due under the
Security Documents, the Borrower, as a separate and independent obligation, shall indemnify and
hold harmless the Bank against the amount of such shortfall. For the purposes of the present
Clause “rate of exchange” means the rate at which the Bank is able on or about the date of such
payment to purchase the contractual currency with the payment currency and shall take into account
any premium and other costs of exchange with respect thereto.

	17.3.	 	Environmental Indemnity

The Borrower shall indemnify the Bank on demand and hold the Bank harmless from and against all
costs, losses, liabilities, actions, proceedings, penalties, fines, sanctions or other outgoings of
whatever nature which may be suffered, or asserted against the Bank at any time, whether before or
after the repayment in full of principal and interest under this Agreement, relating to, or arising
directly or indirectly for any cause or reason whatsoever out of an Environmental Claim made or
asserted against the Bank if such Environmental Claim would not have been made or asserted against
the Bank if it had not entered into any of the Security Documents and/or exercised any of its
rights, powers and discretions thereby conferred and/or performed any of its obligations thereunder
and/or been involved in any of the transactions contemplated by the Security Documents.

	17.4.	 	Communications Indemnity

Express authority is hereby given by the Borrower to the Bank to accept (at the sole discretion of
the Bank) all tested or untested communications given by facsimile, telex or cable, regarding any
or all of the notices, requests, instructions or other communications under this Agreement.

The Borrower hereby assumes promises and recognises that the Bank shall not be held responsible for
any loss, liability or expense that may result from the Bank’s compliance with such communications
and the Borrower undertakes to indemnify the Bank from all actions, proceedings, damages, claims,
expenses and any and all direct and/or indirect losses which the Bank may suffer, by reason of the
Bank following such communications.

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

The risks of misunderstandings and errors of communications being given as mentioned above, are for
the Borrower and the Bank will be indemnified in full pursuant to this Clause.

Notwithstanding the above, the Bank may at any time, (and such discretion of the Bank is expressly
admitted by the Borrower hereby) refuse to execute the notices, requests, instructions or
communications of the Borrower, or any part thereof given

39

 

by telex or fax if not confirmed by telephone without incurring any responsibility for loss,
liability or expense arising out of such refusal.

18. REMEDIES AND WAIVERS

	18.1.	 	Remedies Modifications

The Borrower shall not be released from the obligations contained herein by the granting of time or
any other indulgence to the Borrower or by any other act or thing whatsoever or whereby the
Borrower is and has been so released and no failure to exercise nor any delay in exercising on the
part of the Bank any right or remedy hereunder and/or the other Security Documents or by law shall
operate as a waiver thereof nor shall any single or partial exercise of any right or remedy prevent
any further or other exercise thereof or the exercise of any other rights or remedy. No
modification or waiver by the Bank of any provision of this Agreement or of any of the other
Security Documents nor any consent by the Bank to any departure therefrom by the Borrower shall be
effective unless the same shall be in writing and then shall only be effective in the specific case
and for the specific purpose for which given. No notice to or demand on any such party in any such
case shall entitle such party to any other or further notice or demand in similar or other
circumstances.

	18.2.	 	Cumulative Remedies

The rights and remedies provided herein and/or in any other Security Document are cumulative and
not exclusive of each other nor of any other rights or remedies provided by law.

	18.3.	 	Event of Default

The Borrower accepts that upon an Event of Default occurring the Bank has an absolute right to take
immediate steps to realize its security and recover all and any sums due to it (including but not
limited to the Loan remaining outstanding and any other moneys which may then be due and owing
under this Agreement and/or any of the other Security Documents) exercising all powers available to
it by law and/or set forth in the Security Documents or otherwise and nothing contained in the
Security Documents shall be construed to the contrary.

19. LEGAL IMMINENCE

This Agreement and the other Security Documents contain the entire agreement of the parties and
their provisions supersede the provisions of the commitment letter addressed by the Bank to the
Borrower dated 16th May 2005 and others (save for the provisions thereof which relate to
fees) and any and all other prior correspondence and oral negotiation by the parties in respect of
the matters regulated by this Agreement.

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	19.1.	 	Over Other Security Documents

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

20. COUNTERPARTS

This Agreement may be executed in any number of counterparts each of which when executed and
delivered shall constitute an original but all the counterparts shall together constitute both one
and the same instrument.

21. INVALIDITY

If at any time any one or more provisions of any Security Document and/or any Security Document or
any other documents executed pursuant hereto or thereto is or becomes invalid illegal or
unenforceable in any respect under any applicable law in any jurisdiction whatsoever, the validity
legality and enforceability of the remaining provisions hereof or thereof shall not in any way be
affected or impaired thereby. If, however, this event becomes known to the Bank prior to the
drawdown of the Commitment the Bank shall be entitled to refuse drawdown until this discrepancy is
remedied. Where, however, the provisions of any such applicable law may be waived, they are hereby
waived by the parties hereto to the full extent permitted by that law to the intent that this
Agreement, the other Security Documents and any other documents executed pursuant hereto or thereto
shall be deemed to be valid binding and enforceable in accordance with their respective terms.

22. ASSIGNMENT

This Agreement shall constitute continuing and primary obligations of the Borrower and shall be
binding on and inure to the benefit of the Borrower the Bank and their respective successors and
assigns provided that:

	(a)	 	The Borrower and any other parties to the Security Documents may not assign any rights and/or
obligations hereunder and/or any other Security Document or any documents executed pursuant
thereto without the prior written consent of the Bank and
	 
	(b)	 	The Bank may at any time after prior written notice to the Borrower of not less than fifteen
(15) days assign all or any part of its rights or transfer all or any part of its rights
benefits and/or obligations arising or accruing under this Agreement and or any other Security
Document or any documents executed pursuant to the Agreement and/or any other Security
Document. The Borrower undertakes, immediately on being requested to

41

 

	 	 	do so by the Bank and at the cost of the Bank, to enter into such documents as may be
necessary or desirable to assign or transfer to the Assignee or Transferee all or the
relevant part of the Bank’s interest in the Agreement and/or the other Security Documents
and all relevant references in this Agreement to the Bank shall thereafter be construed
as a reference to the Bank and/or its Assignee or Transferee (as the case may be) to the
extent of their respective interests.

The Bank may disclose to a prospective Assignee, Transferee or to any other person who
may propose entering into contractual relations with the Bank in relation to this
Agreement such information about the Borrower as the Bank shall consider appropriate
without the consent of the Borrower.
	 
	(c)	 	The Bank shall be at liberty to transfer the Loan to any other branch or branches it
maintains in Greece or abroad.

23. EXPENSES

	(a)	 	The Borrower shall reimburse the Bank immediately upon demand for all expenses including but
not limited to the fees and expenses of the Legal Counsels of the Insurance Experts and/or any
other Experts the Bank may use e.t.c. as well as all legal fees and disbursements printing
costs and other out of pocket expenses of whatsoever nature incurred by the Bank

	 	(i)	 	in the negotiation preparation execution and where relevant registration
of any of the Security Documents and of any amendment or extension of or granting of
any waiver or consent hereunder and/or any other Security Document
	 
	 	(ii)	 	in contemplation of, or the enforcement of or preservation of any rights
under any of the Security Documents or otherwise in respect of moneys owing under
any of the Security Documents
	 
	 	(iii)	 	all fees and expenses payable pursuant to the present Clause shall be
paid together with value added tax or any other tax (if any) properly chargeable
thereon. Any value added tax or other tax chargeable in respect of any services
supplied by the Bank under this Agreement shall be paid in addition to any sum
agreed to be paid hereunder.

	(b)	 	The Borrower shall pay all Taxes the Security Documents are or at any time may be subject to,
and shall indemnify the Bank against any liabilities costs claims and expenses resulting from
any omission to pay or delay in paying any such duties levies, dues and/or taxes.
	 
	23.1.	 	If the Bank pays any of the amounts mentioned above as payable by the Bank, the Borrower
shall reimburse same to the Bank together with interest at the rate referred to in Clause 8.4.
from the date of Bank’s actual disbursement or loss to the date of payment to the Bank. The
expenses are payable on demand.

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24. NOTICE

	24.1.	 	Address

Each notice, request, demand or other communication to be given or made hereunder and/or any other
Security Document shall be given in writing addressed to Borrower c/o FREE BULKERS S.A., 93 Akti
Miaouli Street, 185 38 Piraeus , Greece, fax no +30 210 4291010, email freebulk@otenet.gr, for the
att. of Mr George D. Gourdomichalis and/or Efstathios D. Gourdomichalis and/or Ion Varouxakis, each
one hereby irrevocably appointed by the Borrower as its agent and each one is empowered by them to
receive and take delivery on Borrower’s behalf and account all documents and/or instruments
addressed to the Borrower of whatever nature, and the Borrower hereby confirms and warrants that
all such notifications, notices, or other communications e.t.c. delivered to its above agent will
be considered by it as having been delivered to and received by themselves. All such notifications
notices, requests, demands or other communications if addressed to the Bank shall be delivered or
mailed to the Bank at 116, Kolokotroni Street, 185 35 Piraeus, Greece or to such other address as
is notified by one party to the other party hereunder in writing.

	24.2.	 	Time of Delivery

Any notice, request, demand or other communication to be given or made to the Borrower shall be
deemed to have been delivered three (3) Banking Days after having been sent to their agent
appointed by them in the preceding Clause, by first — class registered post prepaid in an envelope
addressed as aforesaid but in the case of a telex facsimile transmission or other means of
telecommunication in permanent written form or delivery by hand, such notice shall be deemed to
have been delivered at the time of dispatch. If the day of dispatch is not a Banking Day it shall
be deemed to have been received at the opening of business on the next such Banking Day.

25. GOVERNING LAW AND JURISDICTION

	(a)	 	This Agreement shall be governed by and construed in accordance with English Law. The
Mortgage shall be governed by the law of the flag of the Vessel. The Personal Guarantees and
the Pledge shall be governed by the laws of Greece.
	 
	(b)	 	For the exclusive benefit of the Bank, the Borrower hereby irrevocably submits to the
non-exclusive jurisdiction of the Courts of Piraeus. Further, the Borrower agrees that any
summons, writ or other legal process issued against any of the Security Parties either in
England or Greece or in any other country as the case may be, shall be served upon the
Borrower in Greece c/o Mr John Hadjis at 6, Bouboulinas Street, 185 35 Piraeus , Greece, fax
no +30 210 4225300 or his successors, who is hereby authorised by the Borrower, acting on its
own behalf to accept such service, which shall be deemed to be good service on the Borrower.
The foregoing shall not limit the right of the Bank to start proceedings in any

43

 

	 	 	other country or to serve process in any other manner permitted by law. The Borrower
hereby waives any objections as to the inconvenience of any forum elected by the Bank.
	 
	(c)	 	If it is decided by the Bank that any such proceedings should be commenced in any other
country, then any objections as to the jurisdiction or any claim as to the inconvenience of
the forum is hereby waived by the Borrower all of whom the Borrower confirms that they are
representing and binding, and it is agreed and undertaken by the Borrower to accept service of
legal process and not to contest the validity of such proceedings as far as the jurisdiction
of the court or courts involved is concerned.

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Schedule I

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

Part 1

	(a)	 	Constitutional documents
	 
	 	 	copies, legalized by a lawyer and certified by an officer of the relative corporate
Security Party as true, complete and up to date copies of all documents which contain or
establish or relate to the constitution and organization of such Security Party as well
as of any corporate shareholder of such Security Party (or correspondingly similar copies
in case of a different Company).
	 
	(b)	 	Corporate authorisations
	 
	 	 	copies of the relevant minutes containing the unanimous resolutions of the directors and
shareholders of each corporate Security Party approving the Security Documents to which
such Security Party is, or is to be, party and authorizing the signature, delivery and
performance of such Security Party’s obligations thereunder, as well as copies of the
resolutions of the Corporate Shareholders to participate at and/or to approve the
relative meeting of the shareholders of the respective Security Party. All copies of the
meetings and resolutions of the Directors and Shareholders of each such Security Party to
be certified (in a certificate dated not earlier than five Banking Days prior to the date
of this Agreement) by the Secretary of such Security Party as:

	 	(i)	 	being complete true and correct;
	 
	 	(ii)	 	being duly passed at meetings duly convened and held of the directors of
such Security Party where the directors were present in person at and throughout the
said meetings and the resolutions were passed unanimously;
	 
	 	(iii)	 	not having being amended, modified or revoked; and
	 
	 	(iv)	 	being in full force and effect

	 	 	and duly legalised by the appropriate consul as well as the originals or certified copies
of any Powers of Attorney issued by any Security Party pursuant to such resolutions duly
legalized by the appropriate consul.
	 
	(c)	 	Official Certificate of Good Standing of each corporate Security Party and of the corporate
shareholders thereof.
	 
	(d)	 	Certificate of the legal shareholding of each corporate Security Party and of the corporate
shareholders thereof stating the number of shares held by each shareholder, issued by the
appropriate authority or, if there is no such possibility issued and signed by the respective
Secretary.

45

 

	(e)	 	Evidence of the ultimate beneficial shareholding and number of shares held by each
shareholder of each corporate Security Party and of the corporate shareholders in form and
substance satisfactory to the Bank.
	 
	(f)	 	Certificate of Incumbency
	 
	 	 	a list of directors and officers of each corporate Security Party and of every corporate
shareholder specifying the names and positions of such persons, certified (in a
certificate dated no earlier than five Banking Days prior to the date of this Agreement)
by an appropriate government authority, or if this is not possible, by the Secretary of
such Security Party, or of the corporate shareholder to be true, complete and up to date
and duly legalized by the appropriate consul.
	 
	(g)	 	A certificate, on behalf of each Security Party by a Director having been authorised to
execute same duly legalized by the appropriate consul on which the documents mentioned
sub-sections (a), (b), (c), (d), (e) and (g) of this Part 1 of Schedule I will have been
attached, reading substantially as follows:

CERTIFICATE

I, the undersigned,.................. the Secretary of (name of the Borrower or
of the other Security Party) ...........................(“the Company”), a company duly
organized and existing under the laws of ................. hereby certify that:

	1.	 	Attached hereto and marked “A” is a true and complete copy of the
Articles of Incorporation and of all documents relating to the
constitution and organization of the Company (and of all amendments
thereof) which are in full force and effect as of the date hereof.
	 
	2.	 	Attached hereto and marked “B” is a true and complete copy of the
Minutes of a Meeting of the Directors of the Company held in ....................... on
the .......... day of ............. 2005 at which Meeting all the Directors of the
Company were present in person and acted throughout such meeting having
been convened and notice thereof having been duly waived by all persons
entitled thereto and the Resolutions passed at the Meeting were passed
unanimously and have not been varied or revoked and remain in full force
and effect as of the date hereof.
	 
	3.	 	Attached hereto and marked “C” is a true and complete copy of the
Minutes of the Meeting of the Shareholders of the Company held in
...................... on the ............ day of .................. 2005 at which meeting bearer share
certificates representing all of the authorised and issued shares of the
Company were tabled and voted throughout by the holders thereof (or, as
the case may be, the registered shareholders of all of the authorised
and issued shares of the Company were present in person or by proxy and
acted throughout) such meeting having been convened and notice thereof
having

46

 

	 	 	been duly waived by all persons entitled thereto and the
Resolutions passed at such meeting were passed unanimously and have not
been varied or revoked and remain in full force and effect and
unamended as of the date hereof.
	 
	4.	 	Attached hereto-marked “D” is a true and complete copy of the Power
of Attorney approved by the Directors and Shareholders of the Company at
the Meetings described in paragraphs, 2 and 3 above.
	 
	5.	 	The Directors and Officers of the Company are, as at the date hereof,
and were, as at the date of the Meeting of the Directors, the following,
being all the Directors and Officers of the Company:

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Director/President
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Director/Secretary
	 

	 	 	 	 	 	 
	 

	 	 	 	 
	 	Director/Treasurer
	 

	 	 	 	 	 	 

	6.	 	The legal shareholder(s) of the Company is/are, as at the date
hereof, and was/were, as at the date of the Meetings of the
Shareholders, that referred to in the copy of the minutes of the Meeting
of Shareholders attached hereto and marked C.
	 
	7.	 	The name, title and specimen signature of each person who has
executed or will execute any of the Security Documents (as such term is
defined in the Loan Agreement referenced in the Resolutions certified in
item 2 above) and/or any other document incidental hereto and thereto on
behalf of our Company are as set forth below, and each such person is on
the date hereof and thereunto duly authorised.

	 	 	 
	Name and Title
	 	Specimen Signature
	 	 	 
	 
	 	 	 
	 
	 	 	 
	 
	 	 	 
	 

	8.	 	I confirm that I am duly authorised by the Company to execute this
certificate.
	 
	 	 	If any certification contained herein ceases to be true and correct at
any time prior to the execution and delivery of the documentation
referenced in the Resolutions in paragraph 2 above, I will immediately
give to the Bank notice to that effect.
	 
	 	 	All terms defined in the Loan Agreement and used but not defined herein
have the meanings given to them in such Agreement.

IN WITNESS WHEREOF, this certificate has been executed on and as of .............................. 2005

47

 

	 	 	 	 	 	 	 
	 	 	(name of the Security Party)	 	 
	 
	 	 	 	 	 	 
	 

	 	by:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

	(g)	 	Opinions
	 
	 	 	an opinion on the validity of the Security Documents addressed to the Bank by special
legal advisers approved by it and having particular knowledge of the national law by
which the validity of the relative Security Document may be affected.
	 
	(h)	 	Further opinions
	 
	 	 	an opinion of the legal adviser to the Borrower as to all matters of law as the Bank
shall deem relevant and any further legal or other expert opinion as it may require.
	 
	(j)	 	Borrower’s process agent
	 
	 	 	a copy, certified as a true copy by the Borrower’s solicitors of a letter from the
Borrower’s agent for receipt of service of proceedings accepting its appointment under
the Security Documents in which it is or is to be appointed as such agent; and
	 
	(k)	 	Any other Security Parties process agent
	 
	 	 	a copy, certified as true copy by the Borrower’s solicitors of a letter from any of the
Security Parties agent for receipt of service of proceedings referred to in the Security
Documents accepting its appointment, and
	 
	(l)	 	Insurance Opinion
	 
	 	 	an opinion from insurance consultants approved by the Bank, on the insurances effected in
respect of the Vessel.
	 
	(m)	 	Arrangement Fee
	 
	 	 	evidence that the Arrangement Fee has been paid in full.

48

 

Documents and evidence required as conditions precedent and

subsequent

Part 2

Evidence concerning the Vessel

	(a)	 	Charter free valuation of the Vessel as at the date determined by the Bank prepared on the
basis specified in the Agreement.
	 
	(b)	 	Evidence that the Vessel has been duly registered in the ownership of her owner under the
laws and flag of her shipping registry free from any Encumbrances (including those on her
earnings, insurances, and requisition compensation) save for those in favour of the Bank and
that the Mortgage on the Vessel has been recorded in the respective Registry with first
priority.
	 
	(c)	 	Evidence that the Vessel has been surveyed at the cost of the Borrower by surveyors appointed
and/or approved by the Bank and a copy of the surveyors’ report has been delivered to it.
	 
	(d)	 	Certificate of Confirmation of Class for hull and machinery confirming that the Vessel is
classed in the highest Class of a Classification Society acceptable to the Bank and remains
free of recommendations notations affecting class The Bank should be notified of the
Classification Society with which the Vessel will be or is (as the case may be) classed at
least fifteen days prior to the Drawdown Date.
	 
	(e)	 	Due authorisation enabling the Bank to obtain copies of class records or other information at
its discretion from the Classification Society regarding the Vessel and a confirmation from
the classification Society that it will forward to the Bank all the quarterly listings issued
in respect with the Vessel’s condition.
	 
	(f)	 	Photocopies of the Vessel’s current and unexpired trading certificates.
	 
	(g)	 	Evidence that the Vessel has been or will -on drawdown- be insured in accordance with the
insurance requirements provided for in the Schedule of this Agreement with Underwriters,
Insurance Companies, P & I and War Risks Associations which meet with the approval of the
Bank. Such evidence shall include Hull and Machinery Marine risks full cover notes, stating
all terms and conditions listing the security involved and incorporating the Loss Payable
Clause and in the case of War Risks and Protection and Indemnity cover the Certificate of
Entry and/or cover notes if appropriate.
	 
	(h)	 	Letters of Undertaking for the Vessel acceptable to the Bank and issued by Hull and Machinery
brokers and/or War Risks Associations or brokers and Protection & Indemnity Associations
approved by the Bank for the Vessel acceptable to the Bank.

49

 

	(i)	 	Certified true photocopies of any charterparty or other contract of employment of Vessel
which will be in force on the Drawdown Date.
	 
	(j)	 	Certified true photocopies of the management agreement relating to the Vessel.
	 
	(k)	 	Evidence that the Manager and the Vessel has obtained certification of compliance with ISM
code and ISPS code.
	 
	(l)	 	Evidence that the Manager has obtained certification from YEN as to the management of the
Vessel 
	 
	(m)	 	Government Gazette in relation to the Manager regarding the establishment of an office under
law 89/67, 378/78 and a recent certificate from YEN as to the operation and legal
representation of the office established in Greece 
	 
	(n)	 	In case the Bank deems it necessary to have evidence of the title of the previous owner of
the Vessel, the Borrower will provide to it the evidence the Bank may require including the
documents mentioned in sub-sections (b), (d) and (e) above.

Evidence concerning newly purchased vessels

	(a)	 	A copy of the M.O.A for the Vessel certified as true and complete by the legal counsel of the
Borrower;
	 
	(b)	 	Photocopy of the notarially certified and legalized Bill of Sale transferring title in the
Vessel to the Borrower free of all encumbrances, maritime liens and other debts whatsoever as
well as a copy of the Protocol of delivery and acceptance of such Vessel and of the Commercial
Invoice.
	 
	(c)	 	Confirmations by the Insurers of the Vessel addressed to the Bank that they will issue
letters of undertaking and endorse notices of assignment and loss payable Clauses on the
Insurances, as soon the Vessel will be registered in the ownership of the Borrower.
	 
	(d)	 	Evidence in the form of a certificate from the Vessel’s Registry proving the Seller’s title
to the Vessel free of any Encumbrances, debts or claims of any nature whatsoever;
	 
	(e)	 	Duly certified copies of the corporate documentation of the Seller proving the legal
existence of the Seller and the due authorization of the sale of the Vessel.
	 
	(f)	 	Evidence that the ten per cent (10%) deposit in respect of the Vessel and all other sums of
money (other than the Loan) required to be paid by the respective Borrower to the Seller
pursuant to the M.O.A. have been duly paid.

50

 

	(g)	 	As a condition subsequent authenticated copy of a Transcript of Registry issued by the
Registrar of Ships proving the registration of the Vessel in the ownership of the Buyer and
the recording of the Mortgage on first priority. Such evidence must be produced to the Bank
not later than three (3) Banking Days after the Drawdown Date.

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Schedule II

INSURANCE REQUIREMENTS

A. PREAMBLE

This Schedule is an integral part of the above Agreement to which it is attached. All the terms and
conditions hereinbelow and/or any other provision concerning Insurance in any Clause of the
Security Documents form the Insurance requirements thereof.

The following words and expressions of this Schedule when used in the Security Documents shall be
interpreted as follows:

“Approved Brokers”: Insurance Broker(s) and/or firm of Insurance Brokers, appointed by the Owner,
as may from time to time be approved by the Bank in writing and/or appointed by the Bank for the
purposes of this Agreement;

“Excess Risks”: The proportion (if any) of claims for general average, salvage and salvage charges
and under the standard collision clause which will not be recoverable, in consequence of the
value at which the Vessel is assessed for the purpose of such claims exceeding her insured value;

“Insurances”: All the policies and contracts of insurance as set forth under paragraph B
hereinbelow which are taken out or entered into by or for the benefit of the Owners (whether in the
sole name of the Owners or, if required by the Bank, in the joint names of the Owners and the Bank)
in respect of the Vessel and her earnings or otherwise howsoever in connection with the Vessel and
all benefits of such policies and/or contracts (including all claims of whatsoever nature and
return of premiums);

“Insurers” means the underwriters or insurance companies with whom any insurance is effected and
the associations of any protection and indemnity, FD & D or war risks or the managers of such
associations in which the Vessel may at any time be entered. All Insurances must be contracted with
Insurers approved by the Bank;

“Loss Payable Clause”: The provisions regulating the manner of payment of sums receivable under the
Insurance which are to be incorporated in the relevant insurance document, such Loss Payable
Clauses to be in the forms set out in Paragraph D (1) hereinbelow, or such other form as may from
time to time be approved in writing by the Bank;

“Owners”: The Borrower referred to in the Loan Agreement;

“Protection and Indemnity Risks”: The usual risks covered by a Protection and Indemnity Association
(whether actually covered by Protection & Indemnity Association(s) and/or underwriters) and/or
insurance companies), including the proportion (if any) which is not recoverable in the case of
collision under the standard collision clause;

52

 

“Required Amount” means the aggregate of the insured amounts on the Vessel which Required Amount
can not be less than one hundred twenty five per cent (125%) of the amount of the Loan;

“War Risks”: Risks including the risk of mines and all risks excluded from the standard form of
marine policy by the free of capture and seizure clause;

B. INSURANCES TO BE EFFECTED AND MAINTAINED

The Insurance must be effected and maintained according to the provisions of the Loan Agreement,
including this Schedule and the risks set forth in this as follows:

a. Hull and Machinery

Insurance against fire and usual marine risks (including Excess Risks if so required by the Bank)
on an agreed value basis, on a full cover and all risks basis according to English or American or
similar Hull Clauses, for the Required Amount, with such reasonable deductible and upon such terms
as shall from time to time be approved in writing by the Bank;

b. Increased Value

(if required by the Bank) Insurance of increased value (Total Loss only, Excess Liabilities
included) as per the applicable English or American Institute Clauses or similar clauses
(Disbursement/Increased Value/Excess Liabilities) up to an amount no less than the Required Amount,
as shall from time to time be approved in writing by the Bank;

c. Loss of Earnings and/or Loss of Hire and/or Freight Interest

(if required by the Bank) Insurance against loss of earnings and/or loss of charter hire and/or
Freight Interest for such amounts and upon such terms as shall from time to time be approved in
writing by the Bank;

d. War Risks

Insurance against War Risks according to London Institute War Clauses or similar, on an agreed
value basis, for the Required Amount upon such terms as shall from time to time be approved in
writing by the Bank, attaching also the so-called War Protection and Indemnity Clauses. If not
fully covered by these insurances, crew war liabilities insurance shall have to be effected
separately;

e. Protection and Indemnity

Insurance against Protection and Indemnity Risks for the full value and tonnage of the Vessel
insured (as approved in writing by the Bank) in accordance with the relevant Rules/Protection and
Indemnity Institute Clauses and deductibles provided thereof and/or agreed for all risks including
Pollution with Excess Liability insured by P&I Club(s) and/or underwriter(s) and/or insurance
company(ies) approved in writing by the Bank. No risks will be excluded and no deductibles
provided for in the rules and/or agreed will be altered, without the written consent of the Bank
having been previously obtained. If crew liabilities (inductively, loss of life, injury or
illness) have been excluded from the insurance cover or insured on a deductible excess basis, such
liabilities shall be further insured separately with other underwriters, always acceptable to the
Bank and upon such terms as shall from time to time be approved in writing by the Bank;

53

 

f. Pollution Liability

Supplementary insurance of oil pollution liability including full cover of pollution risks for the
amount up to the maximum commercially available limit and upon such terms as shall be commercially
available and approved in writing by the Bank;

g. USA Pollution Risk

Supplementary insurance of oil pollution liability (in the event the Vessel insured is scheduled to
operate within or nearby USA jurisdiction) for an amount and upon such terms as shall from time to
time be approved in writing by the Bank;

h. FD & D Cover

Insurance of Freight, Demurrage and Defence upon such terms and conditions as shall from time to
time be approved in writing by the Bank;

i. Mortgagee’s Interest

Insurance of the mortgagee’s interest, to be effected and maintained by the
Bank, in the name of the Bank, but at the expenses of the Borrower including (if required by the
Bank at its sole discretion) Mortgagee’s Asset Protection (Pollution) coverage and/or additional
perils pollution in the event the Vessel insured trades in the United States waters or in the
Exclusive Economic Zone of the United States (as such term is used in the United States Oil
Pollution Act of 1990) or other similar insurance in respect of any pollution claim(s) against the
Vessel insured, for the amount of 110% of the Loan, calculated at the last Interest Payment Date,
under the “German wording” or similar, for 360 days (or less) or upon such terms as shall from time
to time be determined by the Bank;

j. Mortgagee Rights

Insurance of Mortgagee Rights (if required by
the Bank) to be effected and maintained by the Bank, in the name of the Bank, but at the expenses
of the Owners, covering the legal title and rights of the Bank under the Mortgage in the flag or
host country of the Vessel upon such terms and for such amounts as shall from time to time be
determined by the Bank;

k. Other

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

l. Port Risks

(in the event the Vessel insured is laid up for an extended period) Insurance
effected and maintained with prior written consent of the Bank instead of the insurances required
under the provisions of sub-clauses a, e, f, and k above, against Hull and Machinery Risks,
Protection and Indemnity Risks, subject to the conditions of “Institute Time Clauses Hulls, Port
Risks”, or similar, including War Risks subject to the conditions of “Institute War and Strikes
Clauses, Hulls, Time”, or similar, extended to include War Protection and Indemnity Risks or other
such similar insurance clauses or contact the terms of which shall be approved in writing by the
Bank.

54

 

C. TERMS AND OBLIGATIONS FOR EFFECTING AND MAINTAINING INSURANCES

It is hereby
undertaken by the Owner and/or any other person which is obliged under the Security Documents, that
until all moneys payable to the Bank (whether actually or contingently) pursuant to the Loan
Agreement and the other Security Documents have been paid in full, the Owner shall comply with the
following undertaking:

1. To effect and maintain at all timers the Insurances in form and substance
and under terms satisfactory to the Bank.

2. To effect the Insurances in Dollars or such other
currency as the Bank may approve and through the Approved Brokers (other than the said mortgagee’s
interest insurance which shall be effected through brokers nominated by the Bank) and with such
Insurers as shall from time to time be appointed and/or be approved in writing by the Bank.

3. To
effect and maintain the Insurances free of cost and expense to the Bank in the sole name of the
Owner or, if so required by the Bank, in the joint names of the Owner and the Bank (but without
liability on the part of the Bank for premiums or calls).

4. Unless otherwise agreed in writing by the Bank, the amount in respect of which the Insurances
should be effected shall be equal to at least the market value of the Vessel and shall at least be
125 % of the amount of the Loan.

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

	(a)	 	procure and ensure that the Approved Brokers and/or Insurers as the case may be, shall send
to the Bank a Letter of Undertaking in respect of the Insurances in form and substance
satisfactory to the Bank and a Notice of Cancellation as per Paragraph D hereinbelow. Said
Letter of Undertaking shall be in accordance with the form recommended by Lloyd’s Insurance
Brokers Committee, or any subsequent LIBC form, or any other similar form, which is approved
by the Bank and shall include a further undertaking to give immediate notice of any insurance
being subject to the Condition Survey Warranty (J.H. 115) and/or structural Conditions
Warranty (J.H. 722) and/or the Classification Clause (Hulls) dated 29/6/89, fifteen days prior
to the attachment date of any insurance bearing any of these warranties, or in such shorter
time as the Bank may agree.
	 
	(b)	 	If any of the Insurances form part of a fleet cover, procure that the Vessel shall be
considered by insurers as separately insured and further procure that the Approved Brokers
and/or Insurers as the case may be, shall undertake to the Bank that they shall neither set
off against any claims in respect of the Vessel any premiums due in respect of other Vessel
under such fleet cover or any premiums due for other insurances, nor cancel the

55

 

	 	 	insurance of the Vessel for reason of non-payment of premiums for other Vessel under such
fleet cover or of premiums for such other insurances, and shall undertake to issue a
separate policy in respect of the Vessel if and when so requested by the bank;
	 
	(c)	 	punctually pay all premiums, calls, contributions or other sums payable in respect of all
Insurances and produce all relevant receipts and details or other evidence of payment when so
required by the Bank;
	 
	(d)	 	notify the Bank of the names of the brokers and/or all of the Insurers proposed to be
employed by the Owners for the purposes of the renewal of such Insurances and of the amounts
and terms in which such Insurances are proposed to be renewed and the risks to be covered at
least fifteen (15) days before the relevant policies, contracts or entries, expire, (or in
such shorter period as the Bank may agree), and, subject to compliance with any requirements
of the Bank under these Insurance Requirements, procure that appropriate instructions for the
renewal of such Insurances on the terms so specified are given to the Approved Brokers and/or
to the approved Insurers at least fifteen (15) days before the relevant policies, contracts or
entries expire, and that the Approved Brokers and/or the approved Insurers will at least seven
(7) days before such expiry (or within such shorter period as the Bank may from time to time
agree) confirm in writing to the Bank as and when such renewals have been effected in
accordance with the instructions so given and to procure that a Cancellation Clause shall be
endorsed on the relevant policies, contracts or entries for a Notice of Cancellation to the
Bank on the terms set out in Paragraph D of this Schedule.
	 
	(e)	 	arrange for the execution and delivery of such guarantees or indemnities as may from time to
time be required by any protection and indemnity or war risks association;
	 
	(f)	 	deposit with the Approved Brokers (procure the deposit of) all slips, cover notes, policies,
certificates of entry or other instruments of insurance from time to time issued and procure
that the interest of the Bank shall be endorsed thereon by incorporation of the relevant Loss
Payable Clause and by means of a Notice of Assignment (signed by the Owners) in the form set
out in Paragraph D hereinbelow or in such other form as may from time to time be agreed in
writing by the Bank, and that the Bank shall be furnished with pro forma copies thereof.
	 
	(g)	 	procure that the Insurers shall note the Bank’s interest and endorse the relevant Loss
Payable Clause on the relevant certificates of entry or policies and shall furnish the Bank
with a copy of such certificates of entry or policies;
	 
	(h)	 	do all other necessary things and provide all such documents, evidence and information, so as
to enable the Bank to collect and recover any moneys which shall at any time become due in
respect of the Insurances;
	 
	(i)	 	not employ or permit the Vessel to be employed in any other way than in conformity with the
terms of the Insurances (including any warranties

56

 

	 	 	express or implied therein) and with any applicable law without first obtaining the
consent of the Insurers to such employment and complying with such requirements as to
extra premium or otherwise as the Insurers may prescribe;
	 
	(j)	 	apply all sums receivable under the Insurances which are paid to the Owner in accordance with
the Loss Payable Clauses in repairing all damage and/or in discharging the liability in
respect of which such sums shall have been received;
	 
	(k)	 	in case that the Vessel is scheduled to operate or operates within or nearby USA, make all
the Protection & Indemnity Club US Voyage Quarterly Declarations for each quarter in time
and/or obtain prior to Vessel’s arrival in US territorial waters all relevant certificates as
from time to time may be required, such as COFR, or any other similar, and forward copies of
same to the Bank;
	 
	(l)	 	not without the prior consent of the Bank alter any insurance nor make, consent or agree to
any act or omission which would or might render any insurance invalid, void, voidable or
unenforceable or render any sum paid out under any insurance repayable in whole or in part.
	 
	(m)	 	reimburse the Bank for any premiums paid by the Bank or pay to the Bank the amount of any
premiums to be paid by the Bank in order to effect and maintain a policy of Mortgagee’s
Interest Insurance or any other additional insurance that the Bank decides to take at its
discretion as well as reimburse the Bank for all expenses and premiums paid by the Bank in
order to effect insurances that the Owner failed to effect.

6. Fleet cover is permitted only subject to the prior written approval of the Bank under the
conditions set out in Paragraph 5(b) above and the Bank’s prior express written approval of fleet
aggregate deductibles.

D. FORMS AND WORDING

(a) Loss payable clause

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

(1) Hull and Machinery (Marine & War Risks): It is hereby noted that by an assignment dated
................ the Owner ..................... (insert name) ................... has assigned to EGNATIA BANK S.A. (the
Mortgagee) all rights title and interest in and to all policies and contracts of insurance from
time to time taken out or entered into by or for the benefit of the Owner in respect of
..................... (insert name of Vessel) ................................. and all benefits arising thereof including
all claims of whatsoever nature (including return of premiums) thereunder and accordingly:

Save as hereinafter provided, all claims arising under the Insurances, whether in respect of an actual,
constructive, compromised or arranged Total Loss of the Vessel or otherwise howsoever, shall be
payable to the Mortgagee or as it may direct, (provided that the written consent of the Mortgagee
shall be obtained prior

57

 

to a compromised or arranged Total Loss being agreed with the Insurers) and provided always that
unless and until written notice to the contrary has been received from the Mortgagee, claims (other
than Total Loss claims) not exceeding United States Dollars two hundred thousand (US $ 200.000) or
its equivalent in any other currency (inclusive of any deductible) in respect of any one claim may
be paid to the Owner or its order.

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

(b) Notice of Assignment

The notice of assignment shall be in the following form:

(For attachment by way of endorsement to
the Policy) ..................... the Owner of M/V (the “Vessel”) , HEREBY GIVE NOTICE that by an
assignment of even date herewith and entered into by us with EGNATIA BANK S.A. there have been
assigned by us to the said Bank, as Mortgagee of the Vessel, all insurances in respect thereof and
all benefits arising under the insurances taken or entered into from time to time by the Owners or
for the benefit of the Owners in respect ...................... thereof including but not limited
to the insurances constituted by the policy whereon this notice is endorsed or shall be endorsed.

Signed

For and behalf of

Owner

Dated

(c) Notice of Cancellation

Owners to procure that Notices of Cancellation of Insurances be given by the Insurers and/or by the
brokers to EGNATIA BANK S.A. at its branch office at No 116, Kolokotroni Street, Piraeus, 185 35,
Greece (and such Notices of Cancellation be endorsed on the Insurances) providing that the same
will be given to the Bank in the following cases:

(1) immediately in the event of any material changes affecting the insurances.

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

58

 

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

59

 

Schedule III

Notice of Drawdown

To:

EGNATIA BANK S.A.

116, Kolokotroni Street

Piraeus

Dear Sirs,

Notice of Drawdown

We refer to the Loan Agreement entered into between yourselves and ourselves dated ..................... 2005
pursuant to which a facility of up to US$ ...................... has been made available to us.

We hereby give you notice of drawdown of the amount of the Loan amounting to .........................................

The Drawdown Date is ........................ 2005 (value date).

We request the duration of the first Interest Period to be from .............. to ...............
(....................................... months).

Please credit with the above amount the Operating Account No ............................

By debiting the Operating Account, please proceed to the following payment:

We hereby irrevocably and unconditionally authorise you to debit our account designated
............................... with the Arrangement Fee of $ ............... payable to the Bank pursuant to the
Agreement.

We confirm that the representations and warranties contained in the Agreement are true and accurate
on the date hereof as if made on such date.

	 	 	 	 	 
	 
	 	Your faithfully,	 	 
	 	 	 	 	 
	 
	 	 	 	 
	 
	 	For and on behalf of
	 	 

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

60

 

Schedule IV

	 	 	 	 	 	 	 
	Instalment	 	 	 	Repayment	 	Total Principal
	No	 	Payment Date	 	Instalment	 	Amount
	1
	 	3 months after the Drawdown Date	 	$1,000,000	 	$6,000,000
	 
	 	 	 	 	 	 
	2
	 	6 months after the Drawdown Date	 	$1,000,000	 	$5,000,000
	 
	 	 	 	 	 	 
	3
	 	9 months after the Drawdown Date	 	$750,000	 	$4,250,000
	 
	 	 	 	 	 	 
	4
	 	12 months after the Drawdown Date	 	$750,000	 	$3,500,000
	 
	 	 	 	 	 	 
	5
	 	15 months after the Drawdown Date	 	$750,000	 	$2,750,000
	 
	 	 	 	 	 	 
	6
	 	18 months after the Drawdown Date	 	$750,000	 	$2,000,000
	 
	 	 	 	 	 	 
	7
	 	21 months after the Drawdown Date	 	$250,000	 	$1,750,000
	 
	 	 	 	 	 	 
	8
	 	24 months after the Drawdown Date	 	$250,000	 	$1,500,000
	 
	 	 	 	 	 	 
	9
	 	27 months after the Drawdown Date	 	$250,000	 	$1,250,500
	 
	 	 	 	 	 	 
	10
	 	30 months after the Drawdown Date	 	$250,000	 	$1,000,000
	 
	 	 	 	 	 	 
	11
	 	33 months after the Drawdown Date	 	$250,000	 	$750,500
	 
	 	 	 	 	 	 
	12
	 	36 months after the Drawdown Date	 	$250,000	 	$500,000
	 
	 	 	 	 	 	 
	 
	 	Plus Balloon Payment	 	$500,000	 	0

61

 

IN WITNESS whereof the parties hereto have caused this Agreement to be executed the day and year
first above written.

	 	 	 	 	 	 	 
	SIGNED by

	 	 	)	 	 	 
	Stefanos Kardamakis

	 	 	)	 	 	 
	Pantelis Vokos

	 	 	)	 	 	 
	the duly authorised attorneys

	 	 	)	 	 	 
	for and on behalf of

	 	 	)	 	 	 
	EGNATIA BANK S.A.

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	SIGNED by

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	/s/
[ILLEGIBLE]          

the duly authorised attorney

	 	 	)	 	 	 
	for and on behalf of

	 	 	)	 	 	 
	ADVENTURE FOUR S.A.

	 	 	)	 	 	 

62

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	CLAUSE	 	PAGE
	1.
	 	PURPOSE, DEFINITIONS AND INTERPRETATION	 	1
	2.
	 	DISBURSEMENT	 	8
	3.
	 	CONDITIONS PRECEDENT	 	8
	4.
	 	REPRESENTATIONS AND WARRANTIES	 	10
	5.
	 	ARRANGEMENT FEE	 	15
	6.
	 	EVIDENCE	 	16
	7.
	 	REPAYMENT	 	16
	8.
	 	INTEREST AND INTEREST PERIODS	 	17
	9.
	 	PREPAYMENT	 	19
	10.
	 	PAYMENTS ACCOUNTS & CALCULATIONS	 	20
	11.
	 	UNLAWFULNESS AND INCREASED COSTS	 	22
	12.
	 	SECURITY	 	23
	13.
	 	COVENANTS	 	24
	14.
	 	EVENTS OF DEFAULT	 	30
	15.
	 	APPLICATION OF PROCEEDS OF SALE OR OF INSURANCE	 	34
	16.
	 	ACCOUNTS	 	35
	17.
	 	INDEMNITY	 	38
	18.
	 	REMEDIES AND WAIVERS	 	40
	19.
	 	LEGAL IMMINENCE	 	40
	20.
	 	COUNTERPARTS	 	41
	21.
	 	INVALIDITY	 	41
	22.
	 	ASSIGNMENT	 	41
	23.
	 	EXPENSES	 	42
	24.
	 	NOTICE	 	43
	25.
	 	GOVERNING LAW AND JURISDICTION	 	43
	Schedule I	 	45
	Schedule II	 	52
	Schedule III	 	60
	Schedule IV	 	61

63Mortgage dated June 14, 2005

 

Exhibit 4.25

THIS FIRST PANAMANIAN NAVAL MORTGAGE is made this ....day of June 2005, between ADVENTURE FOUR S.A.
a corporation organised and existing in good standing under the laws of the Republic of The
Marshall Islands, having its registered office at Trust Company Complex, Ajeltake Island, Majuro,
The Republic of the Marshall Islands, (hereinafter referred to as “the Owner”) of the one part and
EGNATIA BANK S.A., a Banking Corporation, having its registered office at 4, Danaidon Street,
Thessaloniki, Greece, acting for the purposes of this Agreement through its office at 116
Kolokotroni Street, Piraeus 185 35, Greece , (hereinafter called the “Mortgagee”), and the above
parties requested the present deed to be drawn in which they declare, agree and covenant as
follows:

W H E R E A S:

A. The Owner is the sole, absolute and unencumbered owner of the whole of the m.v. “FREE FIGHTER”ex
“SOUTH GLORY” built in 1982, in Varna, Bulgaria and registered under the laws and flag of the
Republic of Panama with IMO No 8027755, International Call Letters ............, Official No ..............
and the following approximate dimensions and tonnages:

	 	 	 	 	 	 	 
	Length:

	 	 	186.92	 	 	metres
	 
	Breadth:

	 	 	27.80	 	 	metres
	 
	Depth

	 	 	15.61	 	 	metres
	 
	Gross Tonnage:

	 	 	23,696.00	 	 	tons
	 
	Net Tonnage:

	 	 	14,790.00	 	 	tons

(hereinafter called “the Vessel”)

(B) Pursuant to a Loan Agreement made between (i) the Mortgagee as lender and (ii) the Owner as
borrower dated 9th June 2005 as the same may be amended from time to time (“the Loan
Agreement”), the Mortgagee has agreed to advance to the Owner the amount of United States Dollars
SEVEN MILLION (US$ 7,000,000) (“the Loan”), which expression shall, where the context permits,
also mean the amount of the Loan from time to time outstanding upon the

 - 1 -

 

 

terms and subject to the conditions set out in the Loan Agreement.

(C) Pursuant to the Loan Agreement, and in consideration of the obligations of the Mortgagee
thereunder, the Owner has agreed, inter alia, to execute and register in favour of the Mortgagee
this First Priority Panamanian Naval Mortgage on the Vessel, as security for the due repayment of
the Indebtedness (as defined hereinbelow) including the repayment of the Loan (as more specifically
set out in the Loan Agreement and this Mortgage) together with interest thereon, costs and other
moneys and interest thereon, all as provided in the Loan Agreement and this Mortgage.

NOW THIS MORTGAGE WITNESSETH as follows:

	1.	 	DEFINITIONS AND INTERPRETATION

	 	1.1	 	In this Mortgage:

	 	1.	 	“Address for Service” means c/o FREE BULKERS S.A., 93 Akti Miaouli Street, 185 38 Piraeus , Greece,
fax no +30 210 4291010, email freebulk@otenet.gr, for the att. of Mr George D. Gourdomichalis
and/or Efstathios D. Gourdomichalis and/or Ion Varouxakis, or such other address as the Owners may
from time to time designate by not fewer than ten (10) days’ written notice to the Mortgagee for
that purpose;

	 
	 	2.	 	“Administration” has the meaning contained in clause 1.1.3 of the ISM Code;

	 
	 	3.	 	“Assigned Property” means the Insurances, the Earnings and the Requisition Compensation;

	 
	 	4.	 	“Assignment” means the deeds of assignment of the Insurances, Earnings and Requisition of
Compensation in connection with the Vessel referred to in Clause 12 of the Loan Agreement;

	 
	 	5.	 	“Business Day” means any day on which banks are open for the transaction of business of the nature
contemplated by the Loan Agreement (and not authorised by law to close) in New York, United States
of America, London, England, and Athens and/or Piraeus, Republic of Greece, and any other financial
centre which the Mortgagee may deem appropriate for the operation of the provisions of the Loan
Agreement;

	 
	 	6.	 	“Charter” means any time charter which may be entered into between the Owner and any charterer in
respect of the Vessel of a greater than 12 (twelve) months duration, acceptable to the Mortgagee;

	 
	 	7.	 	“Company” has the meaning contained in clause 1.1.2 of the ISM Code;

	 
	 	8.	 	“Corporate
Guarantors” means one or more legal entity(ies) nominated by
the Borrower
and accepted by the Bank may at any time guarantee the obligations of the Borrower under this

 

 

	 	 	 	Agreement and/or those of the other Security Parties to the Bank and in the singular means any of
them.
	 
	 	9.	 	“Corporate Guarantees” means the guarantee and indemnity to be provided for by the Corporate
Guarantors referred to in clause 12 of the Loan Agreement and “Corporate Guarantee” means any of
them;
	 
	 	10.	 	“Currency of Account” means, in respect of any payment to be made to the Mortgagee under or
pursuant to any of the Security Documents, the currency in which that payment is required to be
made by the terms of the relevant Security Document;

	 
	 	11.	 	“Default Rate” means the aggregate of a) the Margin b) two percentage points and c) the LIBOR for
an amount similar to the amount of the Indebtedness or any relevant part of the Indebtedness for
such periods as the Mortgagee shall determine in its discretion;

	 
	 	12.	 	“Designated Person” means the person responsible for the safe operation of the Vessel in accordance
with clause 4 of the ISM Code;

	 
	 	13.	 	“DOC” means a valid Document of Compliance issued for the Company by the Administration pursuant to
paragraph 13.2 of the ISM Code;

	 
	 	14.	 	“Dollars” and “$” each means available and freely transferable and convertible funds in lawful
currency of the United States of America;

	 
	 	15.	 	“Drawdown Date” means the date (being a Business Day) on which the Loan is advanced by the
Mortgagee to the Owner pursuant to the Loan Agreement;

	 
	 	16.	 	“Earnings” means all hires, freights and/or other moneys payable to or for the account of the Owner
in respect of the Vessel including (without limitation) all remuneration for salvage and towage
services, demurrage and detention moneys, contributions in general average, compensation in respect
of any requisition for hire and damages (whether awarded by any court or arbitral tribunal or by
agreement or otherwise) for breach of any contract for the operation, employment or use of the
Vessel;

	 
	 	17.	 	“Encumbrance” means any mortgage, charge, pledge, lien, assignment, hypothecation, title retention
or trust arrangement or any other agreement or arrangement which has the effect of creating
security;

	 
	 	18.	 	“Event of Default” means any of the events set out in Clause 7 of this Mortgage and in Clause 14 of
the Loan Agreement;

	 
	 	19.	 	“Facility Period” means the period commencing on the Drawdown Date and ending on the date when the
whole of the Indebtedness shall have been repaid in full and the Owner shall have ceased to be
under any further or contingent liability to the Mortgagee under or in connection
with the Security Documents;

 

 

	 	20.	 	“Group” means the Owner, the other Security Parties and all the all other entities and/or
businesses managed by the Manager and/or controlled by the Personal Guarantors

	 
	 	21.	 	“Guarantors” means the Corporate Guarantors and/or the Personal Guarantors and “Guarantor” means
any of them;

	 
	 	22.	 	“Indebtedness” means the Loan and all other sums of whatsoever nature including costs (together
with all interest thereon) which from time to time may be or become due and payable by the Owner to
the Mortgagee pursuant to the Security Documents;

	 
	 	23.	 	“Insurances” means all policies and contracts of insurance (including all entries in Protection and
Indemnity or War Risk Associations) which are from time to time taken out or entered into in
respect of or in connection with the Vessel or its/their increased value or the Earnings and (where
the context permits) all benefits thereof including all claims of whatsoever nature and returns of
premium;

	 
	 	24.	 	“Interest
Period” means each interest period selected (or, where the context so permits, periods)
agreed by the Mortgagee pursuant to Clause 4.3;

	 
	 	25.	 	“ISM Code” means the International Management Code for the Safe Management of Ships and for
Pollution Prevention, as adopted by the Assembly of the International Maritime Organisation on 4
November 1993 by resolution A.741 (18) and incorporated on 19 May 1994 as chapter IX of the Safety
of Life at Sea Convention 1974;

	 
	 	26.	 	“ISPS Code” means the International Code for the Security of Ships and of Port Facilities
(including Appendixes) adopted by one of the resolutions that were adopted on 12 December 2002 by
the Conference of Contracting Governments to the International Convention for the Safety of Life at
Sea 1974 (London, 9 to 13 December 2002) as the same may be amended or supplemented from time to
time.

	 
	 	27.	 	“LIBOR” means, for an Interest Period:

	 
	 	  	 	(a) the rate per annum (rounded upwards, if necessary, to the nearest one-eighth of one per cent.)
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 Telerate Page 3750 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, “Telerate Page 3750” means the display designated
as “Page 3750” on the Telerate Service or such other page as may replace Page 3750 on that service
for the purpose of displaying rates comparable to that rate or on such other service as may be
nominated by the British Bankers’ Association as the information vendor for the purpose of
displaying British Bankers’ Association Interest Settlement Rates for
Dollars); or

	 
	 	  	 	(b) if no rate is quoted on Telerate Page 3750, the rate per annum determined by the Bank to

 

 

	 	  	 	be the arithmetic mean (rounded upwards, if necessary, to the nearest one-eighth of one per cent.) of the
rates per annum notified by the Bank as the rate at which deposits in Dollars are offered by
leading banks to other 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;

	 
	 	28.	 	“Manager” means FREE BULKERS S.A. a company duly incorporated under the laws of the Republic of The
Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Island,
Majuro, the Republic of the Marshall Islands, established in Greece under law 89/67 with an office
at 93, Akti Miaouli street , 185 38 Piraeus, Greece.

	 
	 	29.	 	“Margin” means 1.875% (one point eight seven five percent) per annum;

	 
	 	30.	 	“Mortgage” means this mortgage;

	 
	 	31.	 	“Mortgagee’s Interest Insurances” means all policies and contracts of mortgagee’s interest
insurance, mortgagee’s additional perils (oil pollution) insurance and any other insurance from
time to time taken out by the Mortgagee in relation to the Vessel;

	 
	 	32.	 	“Personal Guarantees” means the guarantee and indemnity to be provided for by the Personal
Guarantors referred to in clause 12 of the Loan Agreement and “Personal Guarantee” means any of
them;

	 
	 	33.	 	“Personal Guarantors” means one or more persons to be approved by the Mortgagee in its discretion
who shall execute Personal Guarantees and/or (where the context permits) any other person who
shall give to the Mortgagee a guarantee and/or indemnity for the due repayment of all or part of
the Indebtedness and “Personal Guarantor” means any of them;

	 
	 	34.	 	“Proceedings” means any suit, action or proceedings begun by the Mortgagee arising out of or in
connection with the Security Documents;

	 
	 	35.	 	“Repayment Date” means the date for payment of any Repayment Instalment in accordance with clause 7
of the Loan Agreement and clause 4.1 of this Mortgage;

	 
	 	36.	 	“Repayment Instalment” means any instalment of the Loan to be repaid by the owner to the Mortgagee
pursuant to clause 7 of the Loan Agreement and clause 4.1 of this Mortgage;

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

	 
	 	38.	 	“Security Documents” means the Loan Agreement, this Mortgage, the Assignment, the
Corporate Guarantees, the Personal Guarantees, the Pledge and or (where the context permits) any
one or more of them or any other agreement or document which may at any time be executed as
security for the payment of all or any part of the Indebtedness;

 

 

	 	39.	 	“Security Parties” means the Owner, the Guarantors and any other person or company who may at any
time during the facility period be liable for, or provide security for, all or any part of the
Indebtedness, and “Security Party” means any one of them;

	 
	 	40.	 	“Safety Management Certificate”(SMC) means a valid safety management certificate issued for the
Vessel by or on behalf of the Administration pursuant to paragraph 13.4 of the ISM Code;

	 
	 	41.	 	“SMS” means a safety management system for the Vessel developed and implemented in accordance with
the ISM Code and including the functional requirements, duties and obligations required by the ISM
Code;

	 
	 	42.	 	“Threshold Amount” means two hundred thousand Dollars ($200,000) or its equivalent in any other
currency;

	 
	 	43.	 	“Total Loss” means actual, constructive, arranged, agreed or compromised total loss of a Vessel or
the requisition for title or compulsory acquisition of that vessel by or on behalf of any
government or other authority (other than by way of requisition for hire);

	 
	 	44.	 	“Vessel” means the Vessel more particularly described in Recital (A) to this Mortgage together with
all engines, machinery, boats, tackle, outfit, fuels, spares, consumable and other stores,
belongings and appurtenances whether on board or ashore, including any which may in the future be
put on board or may in the future be intended to be used for the Vessel if on shore.

	 	1.2	 	Unless otherwise specified in this Mortgage, or unless the context otherwise requires, all words
and expressions defined in the Loan Agreement shall have the same meaning when used in this
Mortgage; and clause 1.2 of the Loan Agreement shall apply to this Mortgage as it were set out in
full.

	2.	 	REPRESENTATIONS AND WARRANTIES

	 
	  	 	The Owner represents and warrants to the Mortgagee that:

	 	2.1	 	it was duly organised and is now existing and in good standing under the laws of the Republic of
The Marshall Islands, it has duly authorised this Mortgage and all corporate action necessary for
the execution and delivery of this Mortgage has been taken; and

	 
	 	2.2	 	it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence
of this Mortgage that it be filed, recorded or enrolled with any governmental authority or agency or
stamped with any stamp or similar transaction tax, except for registration of this Mortgage with
the Registrar of Ships of the Republic of Panama; and

	 
	 	2.3	 	it is the sole legal and beneficial owner of the Vessel and it has power to own the Vessel and to

 

 

	 	  	 	register the Vessel under the laws and flag of the Republic of Panama and that (with the exception
of this Mortgage) the Vessel is free from any Encumbrance and is not under arrest or in the
possession of any person (other than her master and crew) who may become entitled to assert a
maritime or possessory lien on it; and

	 
	 	2.4	 	the Vessel is insured and classed in accordance with the requirements of the Loan Agreement and
this Mortgage.

	 
	 	2.5	 	the Vessel has a Safety Management Certificate and is subject to a Safety Management System which
complies with the ISM Code and the Company has a valid Document of Compliance.

	 
	 	2.6	 	the Vessel has a valid Ship Security Certificate and is subject to a security system and any
associated security equipment of the Vessel which complies with the ISPS Code and has an approved
Ship Security Plan on board the Vessel.

	3.	 	MORTGAGE AND ASSIGNMENT

	 	3.1	 	In consideration of the obligations of the Mortgagee under the Loan Agreement and in order to
secure to the Mortgagee the repayment of the Indebtedness and the due and faithful performance and
observance of the mortgage covenants, and in consideration of the premises, the Owner hereby grants
to the Mortgagee a First Priority Panamanian Naval Mortgage on the whole of the Vessel together
with the right to register such First Priority Panamanian Naval Mortgage on the whole of the Vessel
in the Mortgage Register of the competent Public Registry Office at the City of Panama directly and
without participation by the Owners.

	 
	 	3.2	 	The Owner hereby assigns and agrees to assign to the Mortgagee:

	 	3.2.1	 	all Earnings of the Vessel during the existence of this security;

	 
	 	3.2.2	 	all policies of Insurance, that have been, or may hereafter be taken out in respect of the Vessel,
and all the benefits thereof, including claims of whatsoever nature, and return of premiums;

	 
	 	3.2.3	 	all compensation, or other moneys which may be payable as a result of the Vessel having been
requisitioned for title, or in other way, compulsorily acquired.

	 	3.3	 	The total amount secured by this Mortgage is SEVEN MILLION (US $ 7,000,000) plus interest, costs
and other amounts constituting the Indebtedness.

	 
	 	3.4	 	The date of maturity of the Indebtedness secured by this Mortgage and of this Mortgage is the ....th June 2008 (being the Repayment Date of the final Repayment Instalment) or earlier in
accordance with the terms of the Loan Agreement.

 

 

	4.	 	REPAYMENT OF THE LOAN AND INTEREST

	 
	  	 	The Owner acknowledges receipt of the Commitment and agrees to repay the Loan to the Mortgagee by
twelve (12) consecutive quarterly repayment instalments, the first two (2) of such instalments of
Dollars one million (US$ 1,000,000) each, followed by four (4) instalments of Dollars seven hundred
fifty thousand (US$ 750,000) each, followed by six (6) instalments of Dollars two hundred fifty
thousand (US$ 250,000) each, plus a balloon payment (the “Balloon Payment”) of Dollars five hundred
thousand (US$ 500,000) payable together with the last (12th) instalment.

	 	4.1	 	The first Repayment Date being three (3) months after the Drawdown Date and the subsequent
Repayment Dates occurring at three (3) monthly intervals thereafter. Should the Loan not be
advanced by the Mortgagee to the Owner in full, then the amount of the each Repayment Instalment
shall be reduced pro-rata.

	 
	 	4.2	 	The Owner may prepay the Loan in whole or in part in the manner and on the terms set out in the
Loan Agreement.

	 
	 	  	 	The period during which the Loan shall be outstanding pursuant to the Loan Agreement shall be
divided into consecutive Interest Periods of one (1) or three (3) months’ duration or such other
period as may be requested by the Borrower and agreed by the Bank in its absolute discretion
subject to the availability which shall be determined solely by the Bank.

	 
	 	4.3	 	
The first Interest Period shall begin on the Drawdown Date and the final Interest Period shall
end on the Repayment Date applicable to the final Repayment Instalment.

	 
	 	4.4	 	If the Owner shall select, or the Owner and the Mortgagee shall agree, an Interest Period which
does not expire on the next Repayment Date, there shall in respect of each part of the Loan equal
to a Repayment Instalment falling due for payment before the expiry of that Interest Period, be a
separate Interest Period which shall expire on the relevant Repayment Date, and the Interest Period
selected or agreed shall apply to the balance of the Loan only.

	 
	 	4.5	 	During each Interest Period interest shall accrue on the Loan at the rate determined by the
Mortgagee to be the aggregate of (a) the Margin, (b) LIBOR determined at or about 11.00 a.m. on the
second Business Day prior to the beginning of that Interest Period.

	 
	 	4.6	 	Interest shall accrue from day to day, shall be calculated on the basis of a 360 day year and the
actual number of days elapsed, (or, in any circumstances where market practice differs, in
accordance with the prevailing market practice) and shall be paid by the Owner to the Mortgagee on
the last day of each Interest Period and additionally, during any Interest Period exceeding three

 

 

	 	  	 	(3) months on the last day of each such successive three (3) months period after the beginning of
that Interest Period.

	 
	 	4.7	 	Each Interest Period shall, subject to Clauses 4.4, end on the date which numerically corresponds
to the date on which the immediately preceding Interest Period ended (or, in the case of the first
Interest Period, to the Drawdown Date) in the calendar month which is the number of months selected
or agreed after the calendar month in which the immediately preceding Interest Period ended (or, in
the case of the first Interest Period, in which the Drawdown Date occurred), except that:

	 	4.7.1	 	if there is no numerically corresponding date in the calendar month in which the Interest Period
ends, the Interest Period shall end on the last Business Day in that calendar month; and

	 
	 	4.7.2	 	if any Interest Period would end on a day which is not a Business Day, that Interest Period shall
end on the next succeeding Business Day (unless the next succeeding Business Day falls in the next
calendar month, in which event the Interest Period in question shall end on the next preceding
Business Day).

	 
	 	   	 	Any adjustment made pursuant to Clause 4.7.1 or 4.7.2 shall be ignored for the purpose of
determining the date on which any subsequent Interest Period shall end.

	 	4.8	 	If an Event of Default shall occur, the whole of the Indebtedness shall, from the date of the
occurrence of the Event of Default, bear interest up to the date of actual payment (both before and
after judgement) at the Default Rate, compounded and shall be due and payable on the last day of
each period commencing on the due date for payment, while each one of the subsequent periods shall
commence on the last day of the preceding such period at such intervals as the Mortgagee shall in
its discretion determine, which interest shall be payable from time to time by the Owner to the
Mortgagee on demand.

	 
	 	4.9	 	Each determination of an interest rate made by the Mortgagee in accordance with this Clause shall
(save in the case of manifest error or on any question of law) be final and conclusive.

	5.	 	INSURANCE

	 	5.1	 	The Owner covenants to ensure at its own expense throughout the Facility Period that:

	 	5.1.1	 	the Vessel remains insured against marine risks and war risks for her full market value and in any
event for an amount which is not less that one hundred and twenty five per cent (125%) of the
amount of the Loan whichever shall be the greater (or otherwise as required by the Mortgagee); and

	 
	 	5.1.2	 	the Vessel remains entered in a protection and indemnity association in both protection and

 

 

	 	 	 	indemnity classes, or remains otherwise insured against protection and indemnity risks and
liabilities; and

	 
	 	5.1.3	 	the Vessel remains insured against oil pollution caused by the Vessel for the maximum amount of
cover from time to time provided by members of the International Group of P&I Clubs.

	 
	 	5.1.4	 	
the Vessel remains insured in respect of all other matters of whatsoever nature and howsoever
arising in respect of which the Mortgagee would at any time require at its discretion the Vessel to
be insured.

	 
	 	5.2	 	The Mortgagee agrees that, if and for so long as the Vessel may be laid up with the approval of the
Mortgagee, such approval no to be unreasonably withheld, the Owner may at its own expense take out
port risk insurance on the Vessel in place of hull and machinery insurance.

	 
	 	5.3	 	The Owner undertakes to place the Insurances in such markets, in such currency, on such terms and
conditions, and with such brokers, underwriters and associations as the Mortgagee shall have
previously approved in writing, such approval no to be unreasonably withheld. The Owner shall not
alter the terms of any of the Insurances without the prior written consent of the Mortgagee, such
consent no to be unreasonably withheld, and will supply the Mortgagee from time to time on request
(and in any event without request at least annually) with such information as the Mortgagee may in
its reasonable discretion require with regard to the Insurances and the brokers, underwriters or
associations through or with which the Insurances are placed.

	 
	 	5.4	 	The Owner undertakes duly and punctually to pay all premiums, calls and contributions, and all
other sums at any time payable in connection with the Insurances, and in its own expense, to
arrange and provide any guarantees from time to time required by any protection and indemnity or
war risks association. From time to time at the Mortgagee’s request, the Owner will provide the
Mortgagee with evidence satisfactory to the Mortgagee that such premiums, calls, contributions and
other sums have been duly and punctually paid; that any such guarantees have been duly given; and
that all declarations and notices required by the terms of any of the Insurances to be made or
given by or on behalf of the Owner to brokers, underwriters or associations have been duly and
punctually made or given.

	 
	 	5.5	 	The Owner will comply in all respects with all terms and conditions of the Insurances and will make
all such declarations to brokers, underwriters and associations as may be required to
enable the Vessel to operate in accordance with the terms and conditions of the Insurances. The
Owner will not do, nor permit to be done, any act, nor make, nor permit to be made, any omission,
as a result of which any of the Insurances may become liable to be suspended, cancelled or avoided,
or may become unenforceable, or as a result of which any sums payable under or in connection with
the Insurances may be reduced or may become liable to be repaid or rescinded in whole or in part.

 

 

	 	  	 	In particular, but without limitation, the Owner will not permit the Vessel to be employed other
than in conformity with the Insurances without first taking out additional insurance cover in
respect of that employment in all respects to the satisfaction of the Mortgagee, and the Owner will
promptly notify the Mortgagee of any new requirement imposed by any broker, underwriter or
association in relation to any of the Insurances.

	 
	 	5.6	 	The Owner will renew the Insurances before their expiry and shall immediately give the Mortgagee
such details of those renewals as the Mortgagee may require.

	 
	 	5.7	 	The Owner acknowledges that the Mortgagee will (at the Owner’s expense) be at liberty to take out
Mortgagee’ Interest Insurance in respect of the Vessel, which Mortgagee’s Interest Insurance shall
be for an amount not less than 110% of the amount of the Loan, which shall be on such terms and
conditions as the Mortgagee shall in its discretion determine.

	 
	 	5.8	 	The Owner shall deliver to the Mortgagee certified copies (and, if required by the Mortgagee, and
subject to any broker’s lien, the originals) of all policies, certificates of entry and other
documents relating to the Insurances (including, without limitation, receipts for premiums, calls
or contributions) and shall procure that letters of undertaking in such form as the Mortgagee may
approve shall be issued to the Mortgagee by the brokers through which the Insurances are placed
(or, in the case of protection and indemnity or war risks associations, by their managers). If the
Vessel is at any time during the Facility Period insured under any form of fleet cover, the Owner
shall procure that those letters of undertaking contain confirmation that the brokers, underwriters
or association (as the case may be) will not set off claims relating to the Vessel against
premiums, calls or contributions in respect of any other vessel or other insurance, and that the
insurance cover of the Vessel will not be cancelled by reason of non-payment of premiums, calls or
contributions relating to any other vessel or other insurance. Failing receipt of those
confirmations, the Owner will instruct the brokers, underwriters or association concerned to issue
a separate policy or certificate for the Vessel in the sole name of the Owner or of the Owner’s
brokers as agents for the Owner.

	 
	 	5.9	 	The Owner shall promptly provide the Mortgagee with full information regarding any casualty or
other accident or damage to the Vessel, the cost of repairing or remedying which is anticipated to
exceed the Threshold Amount.

	 
	 	5.10	 	The Owner agrees that, at any time after the occurrence and during the continuation of an Event of
Default, the Mortgagee shall be entitled to collect, sue for, recover and give a good discharge for
all claims in respect of any of the Insurances; to pay collecting brokers the customary commission
on all sums collected in respect of those claims; to compromise all such claims or refer them to
arbitration or any other form of judicial or non-judicial determination; and otherwise to deal with

 

 

	 	  	 	such claims in such manner as the Mortgagee shall in its discretion think fit.

	 
	 	5.11	 	Whether or not an Event of Default shall have occurred or be continuing, the proceeds of any claim
under any of the Insurances in respect of a Total Loss shall be paid to the Mortgagee and applied
by it in accordance with Clause 11.

	 
	 	5.12	 	In the event of any claim in respect of any of the Insurances (other than in respect of a Total
Loss), if the Owner shall fail to reach agreement with any of the brokers, underwriters or
associations for the immediate restoration of the Vessel, or for payment to third parties, within
one hundred and eighty (180) days of making the claim, the Mortgagee shall be entitled to require
payment to itself. In the event of any dispute arising between the Owner and any broker,
underwriter, association or club with respect to any obligation to make any payment to the Owner or
the Mortgagee under or in connection with any of the Insurances, or with respect to the amount of
any such payment, the Mortgagee shall (provided that an Event of Default shall have occurred and be
continuing) be entitled to settle that dispute directly with the broker, underwriter, or
association concerned. Any such settlement shall be binding on the Owner.

	 
	 	5.13	 	The Mortgagee agrees that any amounts which may become due under any protection and indemnity entry
or insurance shall be paid to the Owner to reimburse the Owner for, and in discharge of, the loss,
damage or expense in respect of which they shall have become due, unless, at that time the amounts
in question become due, an Event of Default shall have occurred and be continuing, in which event
the Mortgagee shall be entitled to receive the amounts in question and to apply them either in
reduction of the Indebtedness or, at the option of the Mortgagee, to the discharge of the liability
in respect of which they were paid.

	 
	 	5.14	 	The Owner shall not settle, compromise or abandon any claim under or in connection with any of the
Insurances (other than a claim of less than Threshold Amount arising other than from a Total Loss)
without the prior written consent of the Mortgagee.

	 
	 	5.15	 	If the Owner fails to effect or keep in force the Insurances, the Mortgagee may (but shall not be
obliged to) effect and/or keep in force such insurances on the Vessel and such entries in
protection and indemnity or war risks associations as the Mortgagee in its discretion considers
desirable and the Mortgagee may (but shall not be obliged to) pay any unpaid premiums, calls or
contributions. The Owner will reimburse the Mortgagee from time to time on demand for all such
premiums, calls or contributions paid to the Mortgagee, together with interest at the Default Rate
from the date of payment by the Mortgagee until the date of reimbursement.

	6.	 	COVENANTS

	 
	  	 	The Owner covenants with the Mortgagee:

 

 

	 	6.1	 	to comply at all times during the Facility Period in all respects with all other obligations,
express or implied, under or arising out of the Security Documents; and

	 
	 	6.2	 	to keep the Vessel seaworthy and in a state of complete repair and in such a condition as to ensure
her compliance with the requirements from time to time of all applicable laws and of her insurers;
and

	 
	 	6.3	 	to maintain the registration of the Vessel and this Mortgage under the flag of the Republic of
Panama and not cause nor permit to be done any act or omission as a result of which either of
those registrations might be defeated or imperilled; and

	 
	 	6.4	 	to maintain the Vessel in a condition entitling the Vessel to be classed +100A1 with a
classification society members of IACS and be free of recommendations and qualifications with which
compliance is overdue; and

	 
	 	6.5	 	to comply with all laws applicable to the Owner or to the Vessel and to carry on board the Vessel
all certificates and other documents which may from time to time be required to evidence such
compliance; and

	 
	 	6.6	 	not without the prior written consent of the Mortgagee (which will not be unreasonably withheld) to
make, nor permit nor cause to be made, any material change in the structure, type or speed of the
Vessel; and

	 
	 	6.7	 	(without limiting the Owner’s obligations under Clause 6.5) to provide the Mortgagee with
photocopies (certified as true, accurate and complete by a director or the secretary of the Owner)
of the Vessel’s Safety Management Certificate and Document of Compliance and will provide the
Mortgagee with a statement confirming the identity of the Designated Person and the Company; and

	 
	 	6.8	 	(without limiting the Owner’s obligations under Clause 6.5) from the Drawdown Date to the end of
the Facility Period,:

	 	6.8.1	 	to maintain a Safety Management Certificate and Document of Compliance, and

	 
	 	6.8.2	 	to notify the Mortgagee of any actual or threatened withdrawal of the Safety Management Certificate
and/or the Document of Compliance, and

	 
	 	6.8.3	 	not to change the identity of the Designated Person or the Company during the Facility Period
without the prior written consent of the Mortgagee such consent not to be unreasonably withheld,
and

	 
	 	6.8.4	 	to notify the Mortgagee of any “accident” or “major non-conformity”, as each of those terms is
defined in the Guidelines on the implementation of the International Safety Management Code by
Administrations (adopted by the Assembly of the International Maritime Organization pursuant to
Resolution A788 (19)), and of the steps being taken to remedy the situation, and

 

 

	 	6.8.5	 	to procure that the Vessel remains at all times subject to a Safety Management System which
complies with the ISM Code; and

	 
	 	6.8.6	 	to obtain and maintain a valid International Ship Security Certificate (ISSC) issued or to be
issued for the Vessel under the provisions of the International Ship and Port Facility Security
Code (ISPS Code)

	 	6.9	 	to procure that all repairs to the Vessel or replacements of parts or equipment of the Vessel are
effected in such a way as not to diminish the value of the Vessel, and with replacement parts or
equipment the property of the Owner and free of all Encumbrances (other than this Mortgage); and

	 
	 	6.10	 	to permit the Mortgagee and all persons appointed by the Mortgagee to board the Vessel from time to
time during the Facility Period on reasonable notice (unless an Event of Default shall have
occurred and be continuing) to inspect the Vessel’s state and condition and, if the Vessel shall
not be in such a state and condition which complies with the requirements of this Mortgage, to
effect such repairs as shall in the reasonable opinion of the Mortgagee be desirable to ensure such
compliance, without prejudice to the Mortgagee’s other rights under or pursuant to this Mortgage;
and

	 
	 	6.11	 	immediately to notify the Mortgagee by telex or fax (confirmed by letter) of any arrest or
detention of the Vessel and to cause the Vessel to be released from arrest or detention as quickly
as possible, and in any event within fifteen (15) Business Days from the date of arrest or
detention, and immediately to notify the Mortgagee in the same manner of the release of the Vessel;
and

	 
	 	6.12	 	from time to time on request of the Mortgagee (though not more frequently than half-yearly unless
an Event of Default shall have occurred and be continuing) to produce to the Mortgagee written
evidence satisfactory to the Mortgagee confirming that the master and crew of the Vessel have no
claims for wages beyond the ordinary arrears and that the master has no claim for disbursements
other than those properly incurred by him in the ordinary course of trading of the Vessel on the
voyage then in progress; and

	 
	 	6.13	 	not during the Facility Period to sell, agree to sell, or otherwise dispose of, or agree to dispose
of, any shares in the Vessel; and

	 
	 	6.14	 	not during the Facility Period without the prior written consent of the Mortgagee (which will not
be unreasonably withheld) to change the name or port of registration of the Vessel; and

	 
	 	6.15	 	to inform the Mortgagee promptly of any intended lay up of the Vessel; and

	 
	 	6.16	 	in the event of any requisition or seizure of the Vessel, to take all lawful steps to recover
possession of the Vessel as soon as it is entitled to do so; and

 

 

	 	6.17	 	to give to the Mortgagee from time to time during the Facility Period on request (though not more
frequently than half-yearly unless an Event of Default shall have occurred and be continuing) such
information as the Mortgagee may require with regard to the Vessel’s employment, position and state
of repair and will, on the Mortgagee’s request, to supply the Mortgagee with copies of all
charterparties and other contracts of employment relating to the Vessel and copies of the Vessel’s
deck and engine logs; and

	 
	 	6.18	 	to comply with all requirements from time to time of the Vessel’s classification society and to
give to the Mortgagee form time to time during the Facility Period (though not more frequently than
half-yearly unless an Event of Default shall have occurred and be continuing) on request copies of
all classification certificates of the Vessel and reports of surveys required by the Vessel’s
classification society (the Owner by its execution of this Mortgage irrevocably authorising the
Mortgagee to obtain such information and documents from the Vessel’s classification society as the
Mortgagee may from time to time require if that information and/or those documents have not been
received by the Mortgagee from the Owner within seven days of the Mortgagee’s request), and to
notify the Mortgagee immediately of any requirement or recommendation imposed by the Vessel’s
classification society; and

	 
	 	6.19	 	not during hostilities (whether or not a state of war shall formally have been declared and
including, without limitation, any civil war) to permit the Vessel to be employed in carrying any
goods which may be declared to be contraband of war or which may render the Vessel liable to
confiscation, seizure, detention or destruction, nor to permit the Vessel to enter any area which
is declared a war zone by any governmental authority or by the Vessel’s insurers unless the Owner
has effected at its own expense such additional insurances as may be required in order to maintain
the Vessel’s full war risks cover in accordance with Clause 5.1; and

	 
	 	6.20	 	not without the prior written consent of the Mortgagee (which will not be unreasonable withheld) to
let the Vessel on any demise charter or on any time charter, consecutive voyage charter or other
contract of employment which (inclusive of any extension option) is capable of exceeding twelve
(12) months, nor to employ the Vessel in any way which might impair the security created by the
Security Documents; and

	 
	 	6.21	 	not without the prior written consent of the Mortgagee to enter into any agreement or arrangement
for sharing the Earnings; and

	 
	 	6.22	 	duly to perform (unless prevented by force majeure) and to take all necessary steps to enforce the
performance by charterers and shippers of, all charterparties and other contracts of employment and
all bills of lading and other contracts relating to the Vessel; and

	 
	 	6.23	 	at any time following the occurrence of an Event of Default pursuant to clause 14 of the Loan

 

 

	 	  	 	Agreement which remains unsatisfied not to let the Vessel on charter or renew or extend any
charter or other contract of employment of the Vessel, nor agree to do so, without the prior
written consent of the Mortgagee; and

	 
	 	6.24	 	to pay and discharge when due from time to time all Taxes, fines and penalties imposed on the
Vessel or the Earnings or on the Owner, its income, profits, capital gains or on any of its
property (unless being contested by the Owner in good faith); and

	 
	 	6.25	 	not without the prior written consent of the Mortgagee to employ anyone other than the Managers as
managers of the Vessel, nor to change the terms and conditions on which the Vessel is managed; and

	 
	 	6.26	 	not at any time during the Facility Period without the prior written consent of the Mortgagee (and
then subject to such conditions as the Mortgagee may impose) to create nor grant nor permit to
exist any Encumbrance over the Vessel or any of the Assigned Property, with the exception of the
Encumbrances and assignments created by the Security Documents and liens for salvage and current
crew’s wages and if, despite this Clause, any Encumbrance should arise, immediately to procure its
discharge within fifteen Business Days of it arising, and promptly to notify the Mortgagee of any
Encumbrance arising and of its discharge in similar manner as is provided in Clause 6.11; and

	 
	 	6.27	 	to notify the Mortgagee immediately the Owner becomes aware of any legal proceedings or arbitration
involving the Vessel or the Owner where the amount claimed by any party (ignoring any counterclaim
or defence of set-off) exceeds or may reasonably be expected to exceed the Threshold Amount; and

	 
	 	6.28	 	not without the prior written consent of the Mortgagee to put the Vessel into the possession of any
person for the purpose of work or repairs estimated to cost more than the Threshold Amount (except
for repairs the cost of which is recoverable under the Insurances and in respect of which insurers
have agreed to make payment in accordance with any applicable loss payable clause) unless that
person shall have given an undertaking to the Mortgagee in such terms as the Mortgagee shall
reasonably require no to exceed a lien on the Vessel for the cost of the work; and

	 
	 	6.29	 	If and so often as the aggregate value of the Vessel as determined in accordance with Clause
13.5.4 of the Loan Agreement plus the value of any additional security for the time being actually
provided to the Mortgagee pursuant to this Clause shall be less than 140% of the Loan outstanding
from time to time(the “Minimum Value”), the Owner will, within forty (40) days of the request of
the Mortgagee to do so either pay to the Mortgagee or to its nominee a cash deposit in the amount
of such shortfall to be secured in favour of the Mortgagee as additional security for the payment
of the Indebtedness or give to the Mortgagee other additional security in amount and

 

 

	 	   	 	form acceptable to the Mortgagee in its discretion or prepay such amount of the Indebtedness as will
ensure that the Minimum Value of the Vessel (determined as aforesaid) plus the value of any
additional security for the time being actually provided to the Mortgagee pursuant to this Clause
shall not be less than 140% of the Loan outstanding from time to time.

	 
	 	6.30	 	to place and at all times during the Facility Period retain a properly certified copy of this
Mortgage and of any assignment of this Mortgage (if so required by any assignee) on board the
Vessel with the Vessel’s papers and to cause such certified copy and papers to be exhibited to all
persons having business with the Vessel which might give rise to a lien on the Vessel, other than a
lien for crew’s wages or salvage or the lien constituted by this Mortgage, and to any
representative of the Mortgagee and to place and keep prominently displayed in the chart room and
in the master’s cabin of the Vessel a framed printed notice in plain type of such size that the
paragraph of reading matter shall cover a space not less than six inches by nine inches reading as
follows:
	 
	 	   	 	“NOTICE OF MORTGAGE

	 	   	 	This Vessel is owned by ADVENTURE FOUR S.A., a corporation organised and existing in
good standing under the laws of the Republic of The Marshall Islands, and is subject
to a First Preferred Naval Mortgage in favour of EGNATIA BANK S.A.of Greece pursuant
to the provisions of Chapter V Title IV of Book Second of the Code of Commerce of
the Republic of Panama and other pertinent legislation and pursuant also to the
terms of the said Mortgage a certified copy of which is preserved with the
vessel’s papers.

	 
	 	   	 	Therefore, neither the Owners nor the Captain nor any officer or agent nor ay
charterer of this vessel nor any other person whatsover has any power, right or
authority whatever to create, incur or permit the imposition on this vessel of any
commitments or encumbrances except for crews wages accrued for not more than three
(3) months or salvage”.

	7.	 	EVENTS OF DEFAULT

	 
	   	 	The Mortgagee may at its discretion declare all or any part of the Indebtedness (including accrued
but unpaid interest) to be immediately due and payable on the happening of any of the events set
out in this Clause:

	 	7.1	 	if the Owner defaults in the payment of any part of the Indebtedness when due; or

	 
	 	7.2	 	if any representation or warranty or any other information made or given by the Owner in or leading
up to or during the currency of the Security Documents shall be false or incorrect or

 

 

	 	  	 	misleading in any respect which the Mortgagee in its discretion considers to be material; or

	 
	 	7.3	 	if a distress or execution or other process of a court or authority is levied on any of the
property of the Owner after final judgement or by order of any competent court or authority and is
not satisfied within fourteen (14) days of such levy; or

	 
	 	7.4	 	if the Owner shall:

	 	7.4.1	 	apply for or consent to the appointment of a receiver, trustee, administrator or liquidator of
themselves or of all or part of his assets; or

	 
	 	7.4.2	 	be unable or admit his inability to pay his lawful debts as they mature; or

	 
	 	7.4.3	 	make a general assignment for the benefit of creditors; or

	 
	 	7.4.4	 	go into liquidation or administration or be adjudicated bankrupt or insolvent; or

	 
	 	7.4.5	 	file a voluntary petition in bankruptcy or a petition or an answer seeking re-organisation or an
arrangement with creditors to take advantage of any insolvency law; or

	 
	 	7.4.6	 	file any answer admitting the material allegations of or consent to or default in answering a
petition filed against them in any bankruptcy, liquidation, re-organisation, administration or
insolvency proceedings or take any action for the purpose of effecting any of the foregoing; or

	 
	 	7.4.7	 	cease trading or threaten so to do; or

	 
	 	7.4.8	 	has appointed to it an Inspector under the Companies Act 1985 or any statutory provision which the
Mortgagee in its discretion shall consider analogues thereto; or

	 	7.5	 	if the Owner fails to observe or perform any of the covenants, conditions, undertakings, agreements
or obligations on his part contained in any of the Security Documents or shall be in breach thereof
or if there shall occur any event which would or would with the passage of time render performance
thereof impossible or unlawful or unenforceable by the Mortgagee; or

	 
	 	7.6	 	if any document or certificate referred to in Clause 3 of the Loan Agreement is not delivered to
the Mortgagee within the time required by it; or

	 
	 	7.7	 	if any consent, licence, approval or authorisation which is now or which may hereafter become
necessary to enable the Owner to comply with any of its obligations contained in any of the
Security Documents shall be revoked, modified, withdrawn or withheld or shall cease to remain in
full force and effect; or

	 
	 	7.8	 	if any order or judgement is given by any Court for the liquidation, winding up or re-organisation
of the Owner or the bankruptcy or for the appointment of a receiver, conservator, administrator,
liquidator or trustee of the Owner or all or part of the assets of the Owner or if any person shall
appoint or purport to appoint such receiver, conservator, administrator, liquidator or trustee and
in the opinion of the Mortgagee such event would be likely to have a materially adverse effect on
the Owner; or

 

 

	 	7.9	 	if the business of the Owner is wholly or partially curtailed by any seizure or intervention by or
under authority of any government or if all or a substantial part of the undertaking, property or
assets of the Owner is seized, nationalised, expropriated or compulsorily purchased by or under
authority of any government; or

	 
	 	7.10	 	if the Vessel or any other vessel which may from time to time be mortgaged to the Mortgagee as
security for the repayment of the Indebtedness is forfeited, lost, destroyed or abandoned or is
compulsorily acquired or requisitioned for title or for hire by or on behalf of any government or
other authority or is confiscated, forfeited, seized or condemned as prize or shall be or become an
actual, constructive, arranged or agreed or compromised total loss and the insurance proceeds are
not paid within a period of 180 days from such occurrence;

	 
	 	7.11	 	if any other indebtedness or obligation for borrowed money of the Owner by reason of default on
the part of the Owner becomes due or capable of being declared due prior to its stated maturity or
is not repaid or satisfied at such maturity or if there occurs a material adverse change in the
financial condition of the Owner which the Mortgagee considers may jeopardise its ability to
recover the Indebtedness; or

	 
	 	7.12	 	if the Owner in any manner reduces its authorised or issued or subscribed capital without the
written consent of the Mortgagee; or

	 
	 	7.13	 	if the Vessel or any share therein without the prior written consent of the Mortgagee is sold or
agreed to be sold; or

	 
	 	7.14	 	if any event set out in Clause 7.1 to 7.12 above occurs in relation to any Security Party or any
company belonging to the Group.

	8.	 	MORTGAGEE’S POWERS

	 	8.1	 	If an Event of Default shall occur and be continuing and the Mortgagee shall demand repayment of
all or any part of the Indebtedness, the amount of the Indebtedness to which the Mortgagee’s
demand relates shall from the date of demand bear interest at the Default Rate, the security
constituted by this Mortgage shall become immediately enforceable, and the Mortgagee shall be
entitled to exercise all or any of the rights, powers, discretions and remedies vested in the
Mortgagee by this Mortgage without any requirement for any court order or declaration that an Event
of Default has occurred. The Mortgagee’s right to exercise those rights, powers, discretions and
remedies shall be in addition to and without prejudice to all other rights, powers, discretions and
remedies to which it may be entitled, whether by law or otherwise. The Mortgagee shall be entitled
to exercise its rights, powers, discretions and remedies despite any rule of law or equity to

 

 

	 	   	 	the contrary, and whether or not any previous default shall have been waived, and in particular without
any limitations imposed by law.

	 
	 	8.2	 	In the circumstances described in Clause 8.1, the Mortgagee shall be entitled (but not obliged) to:

	 	8.2.1	 	take possession of the Vessel wherever she may be;
	 
	 	8.2.2	 	discharge the master and crew of the Vessel and employ a new master and crew;

	 
	 	8.2.3	 	navigate the Vessel to such places as the Mortgagee may decide or detain or lay up the Vessel;

	 
	 	8.2.4	 	in the name of the Mortgagee or the name of the Owner, demand, sue for, receive and give a good
receipt for all sums due to the Owner in connection with the Vessel and, in the name of the
Mortgagee or the name of the Owner or the name of the Vessel, commence such legal proceedings as it
may consider appropriate, or conduct the defence of any legal proceedings commenced against the
Vessel or the Owner, in its capacity as owner of the Vessel, the Owner, by its execution of this
Mortgage, expressly assigning and granting to the Mortgagee the power and authority to do so;

	 
	 	8.2.5	 	sell the Vessel or any share therein in any part of the world with or without prior notice to the
Owner and with or without the benefit of any charterparty or other subsisting contract of
employment by public auction or private contract and upon such terms as the Mortgagee in its
absolute discretion may determine with power to postpone any such sale and without being answerable
for any loss occasioned by such sale or resulting from postponement thereof; PROVIDED ALWAYS that
in the case of sale by private contract twenty (20) days prior written notice shall be given by the
Mortgagee to the Owner and to any subsequent mortgagee of the Vessel, and that upon any sale of the
Vessel or any share therein by the Mortgagee the purchaser shall not be bound to see or enquire
whether the Mortgagee’s power of sale has arisen in the manner herein provided and the sale shall
be deemed to be within the power of the Mortgagee and the receipt of the Mortgagee for the purchase
money shall effectively discharge the purchaser who shall not be concerned with the manner of
application of the proceeds of sale or be in any way answerable therefore;

	 
	 	8.2.6	 	replace or repair any part of the Vessel or alter her to suit the Mortgagee’s requirements and put
her through all appropriate surveys;

	 
	 	8.2.7	 	employ agents, servants and others on such terms as the Mortgagee may in its discretion determine;

	 
	 	8.2.8	 	charter or load the Vessel on such terms and for the carriage of such cargoes as the Mortgagee may
in its discretion determine.

 

 

	9.	 	ANCILLARY PROVISIONS

	 	9.1	 	At any time after the occurrence and during the continuation of an Event of Default, the Mortgagee
shall have power to buy in, rescind or vary any contract for sale of the Vessel and generally to do
all things in connection with the sale of the Vessel as it shall think fit.

	 
	 	9.2	 	On any sale of the Vessel made by the Mortgagee the purchaser shall not be bound to enquire whether
the Mortgagee’s power of sale has become exercisable or whether its exercise has become expedient,
and the purchaser shall not be affected by any notice that such sale was or may have been irregular
in any way. The receipt of the Mortgagee for any amounts paid to it shall be a complete discharge
to the purchaser who shall not be concerned with the application of the payment or be answerable
for any misapplication. As regards any purchaser, any such sale shall be deemed to be within the
power of sale conferred on the Mortgagee by this Mortgage and at law and any remedy of the Owner in
respect of any irregularity or impropriety shall be in damages only.

	 
	 	9.3	 	If the Mortgagee takes possession of the Vessel and until sale the Mortgagee shall be entitled
to deal with the Vessel in all respects as if it was the owner of the Vessel.

	10.	 	RECEIVER

	 	10.1	 	At any time after the occurrence and during the continuation of an Event of Default, the Mortgagee
may (but shall not be obliged to) appoint any person to be receiver and/or manager of the Vessel,
and/or any of the Assigned Property.

	 
	 	10.2	 	The appointment of a receiver and/or manager by the Mortgagee may be made in writing under the hand
of any authorised signatory of the Mortgagee.

	 
	 	10.3	 	The Mortgagee shall have the power to authorise any joint receiver and/or manager to exercise any
or all of his powers independently of any other joint receiver and/or manager.

	 
	 	10.4	 	The Mortgagee may at any time and from time to time remove any receiver and/or manager from office
and appoint a replacement.

	 
	 	10.5	 	The Mortgagee shall have the power from time to time to fix the reasonable remuneration of any
receiver and/or manager on the basis of charging from time to time adopted by him or his firm and
any receiver and/or manager shall not be limited to any maximum amount or rate specified by law.

	 
	 	10.6	 	
Any receiver and/or manager appointed pursuant to this Clause shall be the agent of the Owner and
the Owner shall be solely responsible for his acts and defaults and for the payment of his
remuneration.

 

 

	 	10.7	 	Any receiver and/or manager appointed pursuant to this Clause shall have all the powers conferred
on receivers and/or managers or administrative receivers by law without any restriction, whether
imposed by law or otherwise.

	 
	 	10.8	 	Without limitation, any receiver and/or manager shall have power on behalf of the Owner (and at the
Owner’s expense) to do or omit to do anything which the Owner could do or omit to do in relation to
the Vessel or any of the Assigned Property and may exercise all or any of the rights, powers,
discretions and remedies conferred on the Mortgagee by the Security Documents or at law.

	 
	 	10.9	 	No receiver and/or manager shall be liable as mortgagee in possession to account or be liable for
any loss or realisation of, or any default of any nature in connection with, the Vessel or any of
the Assigned Property, or the exercise of any of the rights, powers, discretions and remedies
vested in the receiver and/or manager by virtue of the Security Documents or at law in the absence
of wilful misconduct

	11.	 	APPROPRIATION

	 
	   	 	All amounts received by the Mortgagee arising from the exercise by the Mortgagee of its rights,
powers discretions and remedies under or pursuant to this Mortgage following the occurrence and
during the continuation of an Event of Default (including, without limitation, all amounts received
by the Mortgagee in connection with the taking possession and/or sale of the Vessel, any chartering
or other use of the Vessel by the Mortgagee, and any claims for damages or claims of any insurance
received by the Mortgagee while in possession of or while chartering or using the Vessel) shall,
unless otherwise agreed by the Mortgagee or otherwise expressly provided in the Security Documents,
be applied by the Mortgagee in or towards satisfaction, or by way of retention on account, of the
Indebtedness in such manner as the Mortgagee may in its
discretion determine and the surplus, if any, shall be paid to the Owner.

	 
	12.	 	POWER OF ATTORNEY

	 	12.1	 	The Owner by way of security irrevocably appoints the Mortgagee and any receiver and/or manager
appointed by the Mortgagee severally to be its attorney (with unlimited power of substitution and
delegation) with power (in the name of the Owner or otherwise) to do all acts which the Owner could
do in connection with the Vessel or the Assigned Property, including, without limitation, to
execute and deliver a bill of sale transferring title in the Vessel to a third

 

 

	 	   	 	party and to give a good receipt for any purchase price.

	 
	 	12.2	 	The Mortgagee agrees that it will not exercise any of its powers as attorney of the Owner unless an
Event of Default shall have occurred and be continuing, but the exercise of any such powers by the
Mortgagee shall not put any person dealing with the Mortgagee on enquiry as to whether an Event of
Default has occurred and is continuing and any such person shall not be affected by notice that no
Event of Default has in fact occurred or is continuing.

	 
	 	12.3	 	The exercise by the Mortgagee or by any receiver and/or manager of any of their powers as attorney
of the Owner shall be conclusive evidence of their right to do so.

	13.	 	FURTHER ASSURANCE

	 
	   	 	The Owner agrees that from the time on the written request of the Mortgagee it will immediately
execute and deliver to the Mortgagee all further documents which the Mortgagee may reasonably
require for the purpose of perfecting or protecting the security intended to be created by this
Mortgage.
	 
	14.	 	DISCHARGE OF SECURITY

	 
	   	 	Following the expiry of the Facility Period the Mortgagee will, at the cost of and on the request
of the Owner, execute and deliver to the Owner a discharge of this Mortgage.

	 
	15.	 	COMMUNICATIONS

	 
	   	 	The provisions of clause 24 of the Loan Agreement shall (mutatis mutandis) apply to this
mortgage as if they were set out in full with references to this Mortgage substituted for
references to the Loan Agreement, with references to the Owner substituted for references to the
Borrower and with references to the Mortgagee substituted for references to the Bank respectively.

	 
	16.	 	LAW AND JURISDICTION

	 	16.1	 	This Mortgage shall in all respects be governed by and interpreted in accordance with the law of
the Republic of Panama.

 

 

	 	16.2	 	For the exclusive benefit of the Mortgagee, the parties to this Mortgage irrevocably agree that the
Piraeus Courts of Greece as first instance court and, on appeal, the Piraeus Court of Appeal and
the Supreme Court of Athens, both in Greece, are to have jurisdiction to settle any disputes which
may arise out of or in connection with this Mortgage and that any Proceedings may be brought in
those courts.

	 
	 	16.3	 	Nothing contained in this clause shall limit the right of the Mortgagee to commence any Proceedings
against the Owner in any other court of competent jurisdiction nor shall the commencement of any
Proceedings against the Owner in one or more jurisdictions preclude the commencement of any
Proceedings in any other jurisdiction, whether concurrently or not.

	 
	 	16.4	 	The Mortgagee shall in addition have the right to arrest and take action against the Vessel and /or
any other vessel to which the Owner shall for the time being have the legal title of ownership,
wherever it or they may be, for which purpose the Owner irrevocably agrees that any writ, notice,
judgement or other legal process may be served on the Owner or on the Vessel in the manner set out
in Clause 16.6 or on the master (or anyone acting as the master) of the Vessel or of the vessel
against which the action is taken, which shall be deemed good service on the Owner, the Vessel or
such other vessel for all purposes.

	 
	 	16.5	 	The Owner irrevocably waives any objection which it may now or in the future have to the laying of
the venue of any Proceedings in any court referred to in this Clause and any claim that those
Proceedings have been brought in an inconvenient or inappropriate forum, and irrevocably agrees
that a judgement in any Proceedings commenced in any such court shall be conclusive and binding on
it and may be enforced in the courts of any other jurisdiction.

	 
	 	16.6	 	Without prejudice to the right of the Mortgagee to use any other method of service permitted by
law, the Owner irrevocably agrees that any writ, notice, judgement or other legal process shall be
sufficiently served on it if addressed to the Owner and left at or sent by post to the Address
for Service, and in that event shall be conclusively deemed to have been served at the time of
leaving or if posted, at 9.00 a.m. on the third Business Day after posting by prepaid first class
post.

	 
	 	16.7	 	The Owner irrevocably agrees that any writ, notice, judgment or other legal process shall be
sufficiently served on them if addressed to them and left at or sent by post to c/o Mr John Hadjis
at 6, Bouboulinas Street, 185 35 Piraeus , Greece, fax no +30 210 4225300 or his successors, being
hereby appointed the Owner’ s agent for service of legal proceedings.

	17.	 	MISCELLANEOUS

	 	17.1	 	If at any time any provision of this Mortgage becomes invalid, illegal or unenforceable in any

 

 

	 	   	 	respect, that provision shall be severed from the remainder and the validity, legality and
enforceability of the remaining provisions of this Mortgage shall not be affected or impaired in
any way.

	 
	 	17.2	 	In the event of there being any conflict between this Mortgage and the Loan Agreement, the Loan
Agreement shall prevail.

	 
	 	17.3	 	All the covenants and agreements of the Owner in this Mortgage shall bind the Owner and its
successors and permitted assignees and shall inure to the benefit of the Mortgagee and its
successors, permitted transferees and assignees.

	 
	 	17.4	 	The headings used in this Mortgage are for reference only; have no legal or other significance, and
shall be ignored in the interpretation of this Mortgage.

	 
	 	17.5	 	The representations and warranties on the part of the Owner contained in this Mortgage shall
survive the execution and registration of this Mortgage.

	 
	 	17.6	 	The Mortgagee may at any time and from time to time waive either unconditionally or on such terms
and conditions as it considers appropriate any breach of any of the Security Documents by any of
the Security Parties.

	 
	 	17.7	 	Any waiver by the Mortgagee of any of its rights, powers, discretions or remedies pursuant to the
Security Documents or of any breach by any of the Security Parties, or any forbearance by the
Mortgagee, or any time or other indulgence granted by the Mortgagee to any of the Security Parties
shall not in any way prejudice or affect the right of the Mortgagee to act strictly in accordance
with its rights and powers under or pursuant to the Security Documents.

	 
	 	17.8	 	The Mortgagee may, without prejudice to its rights pursuant to this Mortgage, at any time and from
time to time, and on such terms and conditions as the Mortgagee may in its discretion determine,
agree with any of the Security Parties to vary or amend any of the Security
Documents or any document referred to in or related to any of the Security Documents, or without
notice to the Owner grant time or other indulgence to, or compound with, any other person liable
(actually or contingently) to the Mortgagee in respect of all or any part of the Indebtedness, and
may release or renew negotiable instruments and take and release securities and hold funds on
realisation or suspense account without affecting the liability of the Owner or the rights of the
Mortgagee under or pursuant to the Security Documents.

	 
	 	17.9	 	The Mortgagee may at any time and from time to time delegate to any person all or any of its
rights, powers, discretions and remedies pursuant to the Security Documents on such terms as the
Mortgagee may consider appropriate (including the power to sub-delegate).

	 
	 	17.10	 	Every right, power, discretion and remedy conferred on the Mortgagee under or pursuant to the
Security Documents shall be cumulative and in addition to every other right, power, discretion or

 

 

	 	  	 	remedy to which the Mortgagee may at any time be entitled by law or in equity. The Mortgagee may
exercise each of its rights, powers, discretions and remedies as often and in such order as it
deems appropriate. The exercise or the beginning of the exercise of any right, power, discretion or
remedy shall not be interpreted as a waiver of the right to exercise that or any other right,
power, discretion or remedy either simultaneously or subsequently.

	 
	 	17.11	 	No failure or delay by the Mortgagee in exercising any of its rights, powers, discretions or
remedies shall impair any such right, power, discretion or remedy or be interpreted as a waiver of
or acquiescence in any default on the part of the Owner, unless expressly agreed to do so by the
Mortgagee in writing.
	 
	 	17.12	 	No provision of the Security Documents shall in any way limit the rights, powers, discretions and
remedies of the Mortgagee as mortgagee of the Vessel.

	 
	 	17.13	 	The security constituted by this Mortgage shall be continuing and shall not be satisfied by any
intermediate payment or satisfaction until the Indebtedness shall have been repaid in full and the
Mortgagee shall be under no further actual or contingent liability to any third party in relation
to the Vessel, the Assigned Property or any other matter referred to in the Security Documents. The
security constituted by this Mortgage shall be in addition to any other security now or in the
future held by the Mortgagee for or in respect of the Indebtedness, and shall not merge with or
prejudice or be prejudiced by any such security or other contractual or legal rights of the
Mortgagee nor be affected by any irregularity, defect or informality or by any release, exchange or
variation of any such security.

	 
	 	17.14	 	If the Mortgagee takes any steps to exercise any of its rights, powers, remedies or discretions
pursuant to this Mortgage and the result shall be adverse to the Mortgagee, the Owner and the
Mortgagee shall be restored to their former positions as if no such steps had been taken.

	 
	 	17.15	 	Neither the Mortgagee nor any agent or employee of the Mortgagee nor any receiver and/or manager
appointed by the Mortgagee shall be liable for any losses which may be incurred in or about the
exercise of any of the rights, powers, discretions or remedies of the Mortgagee under or pursuant
to this Mortgage, nor liable as mortgagee in possession for any loss on realisation or for any
neglect or default of any nature for which a mortgagee in possession might otherwise be liable in
the absence of wilful misconduct.

	 
	 	17.16	 	Any discharge, release or reassignment by the Mortgagee of any of the security constituted by, or
any of the obligations of the Owner contained in, any of the Security Documents shall be (and be
deemed always to have been) void if any act (including, without limitation, any payment) as a
result of which such discharge, release or reassignment was given or made is subsequently wholly or
partially rescinded or avoided by operation of any law.

 

 

	 	17.17	 	If the Mortgagee (notwithstanding Clause 6.26) receive notice of any subsequent Encumbrance
affecting the Vessel or any shares in the Vessel or any of the Assigned Property, the Mortgagee may
open a new account in its books for the Owner and/or the Vessel. If the Mortgagee shall not open
such new account, then (unless the Mortgagee gives to the Owner written notice to the contrary) as
from the time of receipt by the Mortgagee of notice of such subsequent Encumbrance, all payments
made to the Mortgagee shall be treated as having been credited to a new account of the Owner and
not as having been applied in reduction of the Indebtedness.

	 
	 	17.18	 	The rights of the Mortgagee under this Mortgage shall not be affected by any change in the
constitution of the Owner or by the liquidation, bankruptcy or insolvency of the Owner.

	 
	 	17.19	 	No variation or amendment of this Mortgage shall be valid unless in writing and signed on behalf of
the Owner and the Mortgagee.

	 
	 	17.20	 	Despite anything to the contrary which may be contained in this Mortgage, it is intended that
nothing in this Mortgage shall waive the preferred status of this Mortgage, and that, if any
provision of this Mortgage shall be interpreted as waiving the preferred status of this Mortgage,
that provision shall to such extent be void and of no effect.

	 
	 	17.21	 	The exercise by the Mortgagee or by any receiver and/or manager appointed by the Mortgagee of any
of its rights, powers, discretions or remedies under or arising out of this Mortgage shall not be
interpreted as the taking by the Mortgagee or by such receiver and/or manager of the management of
the Vessel nor as evidencing any intention by the Mortgagee or by any receiver and/or manager
appointed by the Mortgagee to take over the management of the Vessel, but shall be deemed to be an
exercise of the rights of the Mortgagee under Clauses 10.6 and 12.

	18.	 	POWER OF ATTORNEY FOR REGISTRATION

	 
	   	 	The Owner and the Mortgagee each confer a special power of attorney with right of substitution upon
Messrs. Vives y Associados, a firm of Lawyers with its office at Beatriz M. de Cabal Street, Banco
Aliado Building 8th floor Panama, Republic of Panama,, and/or any partner in that firm
or such partner to take all necessary steps to prepare, and record this instrument of Mortgage in
the appropriate registry office, of the Republic of Panama.

	 
	19.	 	ACCEPTANCE OF MORTGAGE

	 
	   	 	We EGNATIA BANK S.A., referred to hereinabove, as the “Mortgagee”, DO HEREBY ACCEPT this First
Panamanian Naval Mortgage granted to us by ADVENTURE FOUR S.A. and

 

 

covering the Panamanian flag m.v. “FREE FIGHTER” ex “SOUTH GLORY” , and AGREE to its terms and conditions.

IN WITNESS WHEREOF, the said parties hereto have caused this deed to be executed the day and year
first before written.

	 	 	 
	SIGNED by
	 	)
	/s/
[ILLEGIBLE]          
	 	)
	the duly appointed Attorney
	 	)
	for and on behalf of
	 	)
	ADVENTURE FOUR S.A.
	 	)
	of the Republic of The Marshall Islands
	 	)
	 
	SIGNED by
	 	)
	Stefanos Kardamakis
	 	)
	Pantelis Vokos
	 	)
	the duly appointed Attorneys
	 	)
	for and on behalf of
	 	)
	EGNATIA BANK S.A.
	 	)
	 
	 	)

 

 

	 	 	 
	CONTENTS
	 	 
	 
	 	 
	1.     DEFINITIONS AND INTERPRETATION
	 	 	2	 
	2.     REPRESENTATIONS AND WARRANTIES
	 	 	6	 
	3.     MORTGAGE AND ASSIGNMENT
	 	 	7	 
	4.     REPAYMENT OF THE LOAN AND INTEREST
	 	 	8	 
	5.     INSURANCE
	 	 	9	 
	6.     COVENANTS
	 	 	12	 
	7.     EVENTS OF DEFAULT
	 	 	17	 
	8.     MORTGAGEE’S POWERS
	 	 	19	 
	9.     ANCILLARY PROVISIONS
	 	 	20	 
	10.   RECEIVER
	 	 	21	 
	11.   APPROPRIATION
	 	 	22	 
	12.   POWER OF ATTORNEY
	 	 	22	 
	13.   FURTHER ASSURANCE
	 	 	23	 
	14.   DISCHARGE OF SECURITY
	 	 	23	 
	15.   COMMUNICATIONS
	 	 	23	 
	16.   LAW AND JURISDICTION
	 	 	23	 
	17.   MISCELLANEOUS
	 	 	24	 
	18.   POWER OF ATTORNEY FOR REGISTRATION
	 	 	27	 
	19.   ACCEPTANCE OF MORTGAGE
	 	 	27

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