Document:

Exhibit 4.53

 

Private and Confidential

DATED 17 February 2016

KAMSARMAX ONE SHIPPING LTD

        as Borrower

and

NORDDEUTSCHE LANDESBANK GIROZENTRALE

as Lender

and

NORDDEUTSCHE LANDESBANK GIROZENTRALE

as Agent and Security Trustee

and

NORDDEUTSCHE LANDESBANK GIROZENTRALE

as Swap Bank

___________________________________

FACILITY AGREEMENT FOR A USD16,560,000

TERM LOAN FACILITY

____________________________________

INCE & CO

PIRAEUS

Index

 

	Clause   	Page 
	
1

	
Purpose, Definitions, Construction & Majority Lenders

	
1

	
2

	
The Available Commitment and Cancellation

	
16

	
3

	
Interest and Interest Periods

	
18

	
4

	
Repayment and prepayment

	
20

	
5

	
Fees and expenses

	
23

	
6

	
Payments and taxes; accounts and calculations

	
24

	
7

	
Representations and warranties

	
28

	
8

	
Undertakings

	
33

	
9

	
Conditions

	
45

	
10

	
Events of Default

	
46

	
11

	
Indemnities

	
50

	
12

	
Unlawfulness, increased costs and bail-in

	
51

	
13

	
Application of moneys, set off, pro-rata payments and miscellaneous

	
53

	
14

	
Accounts and retentions

	
56

	
15

	
Assignment, transfer and lending office

	
58

	
16

	
Agent and Security Trustee

	
62

	
17

	
Notices and other matters

	
73

	
18

	
Governing law

	
74

	
19

	
Jurisdiction

	
74

	
Schedule 1 The Lenders and their Commitments

	
77

	
Schedule 2 Form of Drawdown Notice

	
78

	
Schedule 3 Conditions precedent

	
79

	
Schedule 4 Form of Transfer Certificate

	
84

	
Schedule 5 Form of Trust Deed

	
88

	
Schedule 6 Form of Compliance Certificate

	
89

THIS AGREEMENT dated 17 February 2016 is made BY and BETWEEN:

	(1)            	KAMSARMAX ONE SHIPPING LTD	as Borrower;

	(2)	NORDDEUTSCHE LANDESBANK GIROZENTRALE as Lender; and

	(3)	NORDDEUTSCHE LANDESBANK GIROZENTRALE as Agent and Security Trustee; and

	(4)	NORDDEUTSCHE LANDESBANK GIROZENTRALE as Swap Bank.

NOW IT IS HEREBY AGREED AS FOLLOWS:

	1	PURPOSE, DEFINITIONS, CONSTRUCTION & MAJORITY LENDERS

	1.1	Purpose

This Agreement sets out the terms and conditions on which Norddeutsche Landesbank Girozentrale agrees to make available to the Borrower a loan in an amount not exceeding the lesser of (a) sixteen million five hundred and sixty thousand Dollars (USD16,560,000) and (b) 69% of the Valuation Amount of the Vessel (to be determined no more than two weeks prior to the Drawdown Date), in two advances to be drawn simultaneously for the purpose of part-financing the acquisition cost of a 82,000 dwt kamsarmax bulker which is to be constructed by the Builder for the Seller, and purchased by, the Borrower.

	1.2	Definitions

In this Agreement, unless the context otherwise requires:

“Account Bank” means Norddeutsche Landesbank Girozentrale, acting for the purposes of this Agreement through its office at Friedrichswall 10, 30159 Hannover, Germany (or of such other address as may last have been notified to the other parties to this Agreement) or such other bank as may be designated by the Agent as the Account Bank for the purposes of this Agreement and which is of a rating acceptable to the Lenders, in their sole discretion;

“Accounts Pledge” means a first priority charge required to be executed hereunder between the Borrower and the Security Trustee in respect of the Earnings Account, the Retention Account and the Drydock Reserve Account in such form as the Agent and the Majority Lenders may require in their sole discretion;

“Advance A” means the advance in the amount of fourteen million Dollars (USD14,000,000) or, as the context requires, the amount thereof outstanding from time to time;

“Advance B” means the advance in the amount of two million five hundred and sixty thousand Dollars (USD2,560,000) or, as the context requires, the amount thereof outstanding from time to time;

“Advances” means together, Advance A and Advance B and, in the singular, means either of them;

“Agent” means Norddeutsche Landesbank Girozentrale, acting for the purposes of this Agreement through its office at Friedrichswall 10, 30159 Hannover, Germany (or of such other address as may last have been notified to the other parties to this Agreement) or such other person as may be appointed as agent by the Banks pursuant to clause 16.13;

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 “Approved Broker” means each of Barry Rogliano Salles, Fearnleys A.S., Simpson Spence & Young Shipbrokers Ltd., Howe Robinson or such other reputable, independent and first class firm of shipbrokers specialising in the valuation of vessels of the relevant type appointed by the Agent and agreed with the Borrower;

 

“Approved Charterer” means AS Klaveness Chartering of Norway;

“Banking Day” means a day on which dealings in deposits in USD are carried on in the London Interbank Eurocurrency Market and (other than Saturday or Sunday) on which banks are open for business in, Athens, London, Hannover and New York City (or any other relevant place of payment under clause 6);

“Bail-In Action” means the exercise of any Write-down and Conversion Powers.

“Bail-In Legislation” means, in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time;

 “Banks” means, together, the Agent, the Security Trustee, the Swap Bank, the Lenders and any Transferee Lenders;

“Borrowed Money” means Indebtedness in respect of (i) money borrowed or raised and debit balances at banks, (ii) any bond, note, loan stock, debenture or similar debt instrument, (iii) acceptance or documentary credit facilities, (iv) receivables sold or discounted (otherwise than on a non-recourse basis), (v) deferred payments for assets or services acquired, (vi) finance leases and hire purchase contracts, (vii) swaps, forward exchange contracts, futures and other derivatives, (viii) any other transaction (including without limitation forward sale or purchase agreements) having the commercial effect of a borrowing or raising of money or of any of (ii) to (vii) above and (ix) guarantees in respect of Indebtedness of any person falling within any of (i) to (viii) above;

“Borrower” means Kamsarmax One Shipping Ltd, having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;

“Break Costs” means the aggregate amount of all losses, premiums, penalties, costs and expenses whatsoever certified by the Agent at any time and from time to time as having been incurred by the Lenders or any of them in maintaining or funding their Contributions or in liquidating or re-employing fixed deposits acquired to maintain the same as a result of either:

		(a)	any repayment or prepayment of the Loan or any part thereof otherwise than (i) in accordance with clause 4.1 or (ii) on an Interest Payment Date whether on a voluntary or involuntary basis or otherwise howsoever; or

		(b)	as a result of the Borrower failing or being incapable of drawing the Loan after the Drawdown Notice has been given;

“Builder” means, together, Jiangsu Tianyuan Marine Import & Export Co., Ltd., Jiangsu Yangzijiang Shipbuilding Co., Ltd. and Jiangsu New Yangzi Shipbuilding Co., Ltd. of The People’s Republic of China;

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 “Casualty Amount”  means seven hundred and fifty thousand Dollars (USD750,000) (or the equivalent in any other currency);

“Certified Copy” means in relation to any document delivered or issued by or on behalf of any company, a copy of such document certified as a true, complete and up to date copy of the original by any of the directors or officers for the time being of such company or by such company’s attorneys or solicitors;

“Charter Assignment” means a specific assignment of the Required Charter and of each Extended Employment Contract required to be executed hereunder by the Borrower in favour of the Security Trustee (including any notices and/or undertakings associated therewith) in such form as the Agent and the Majority Lenders may require in their sole discretion;

“Classification” means, in relation to the Vessel, the highest class available for a vessel of her type with the relevant Classification Society;

“Classification Society” means any classification society (which, if requested by the Lenders, shall be a member of the International Association of Classification Societies) which the Lender has agreed shall be treated as the classification society in relation to the Vessel for the purposes of the relevant Vessel Security Documents;

“Code” means the US Internal Revenue Code of 1986, as amended, and the regulations promulgated and rulings issued thereunder;

“Commercial Manager” means Euroseas Ltd., a company incorporated in the Marshall Islands with its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960 and having its place of business at 4 Messogiou & Evropis Street, 151 24 Maroussi, Greece or Eurobulk (Far East) Ltd. Inc., a company incorporated in the Philippines with its principal office at 12th Floor Ma. Natividad Bldg., 470 TM Kalaw cor., Sts., Ermita, Manila, Philippines or  Eurobulk Ltd. a company incorporated in Liberia and having its branch office at 4 Messogiou & Evropis Street, 151 24 Maroussi, Greece or any other person appointed by the Borrower, with the prior written consent of the Agent (such consent not to be unreasonably withheld), as the commercial manager of the Vessel;

“Commitment” means, in relation to the Loan in relation to each Lender, the sum set out opposite its name in Schedule 1 or any replacement thereof, or otherwise pursuant to the terms of any relevant Transfer Certificate as the amount which, subject to the terms of this Agreement, it is obliged to advance to the Borrower hereunder in respect of the Loan Facility, in each case as such amount may have been reduced and/or cancelled under this Agreement;

“Compliance Certificate” means a certificate substantially in the form set out in schedule 7 signed by the chief financial officer of the Corporate Guarantor;

“Compulsory Acquisition” means, in respect of the Vessel, requisition for title or other compulsory acquisition including, if the Vessel is not released therefrom within 30 days, capture, appropriation, forfeiture, seizure, detention, deprivation or confiscation howsoever for any reason (but excluding requisition for use or hire) in each case by or on behalf of any Government Entity or other competent authority;

“Contribution” means, at any relevant time, in relation to each Lender, the principal amount of the Loan owing to such Lender at such time;

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 “Corporate Guarantee” means the unconditional, irrevocable and on demand guarantee of the obligations of the Borrower under this Agreement, the Master Agreement and the other Security Documents required to be executed hereunder by the  Corporate Guarantor in favour of the Security Trustee in such form as the Agent and the Majority Lenders may require in their sole discretion;

 

“Corporate Guarantor” means Euroseas Ltd., a corporation incorporated in the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;

“Credit Support Document” has in relation to the Master Agreement, the meaning given to that expression therein;

“Credit Support Provider” means any person defined as such in the Master Agreement;

“Default” means any Event of Default or any event or circumstance which with the giving of notice or lapse of time or the satisfaction of any other condition (or any combination thereof) would constitute an Event of Default;

“Delivery Date” means the date on which title to and possession of the Vessel is transferred from the Seller to the Borrower under the MOA;

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

“Drawdown Date” means any date being a Banking Day falling during the Drawdown Period on which the Loan is, or is to be, made available;

“Drawdown Notice” means a notice substantially in the form of Schedule 2;

“Drawdown Period” means the period commencing on the Execution Date and ending on the earliest of (a) 15 March 2016 (or such later date as the Agent may, with the authorisation of the Lenders, agree with the Borrower), (b) the Delivery Date and (c) any date on which (i) the amount of the Loan is equal to the Total Commitment or (ii) the Total Commitment is reduced to zero pursuant to clauses 10.2 or 12;

“Drydock Reserve Account” means an interest bearing USD account opened or to be opened with the Account Bank in the name of the Borrower designated “Kamsarmax One Shipping Ltd - Drydock Reserve Account” and includes any other account designated in writing by the Agent to be the Drydock Reserve Account for the purposes of this Agreement;

“Earnings” means all moneys whatsoever from time to time due or payable to the Borrower during the Facility Period arising out of the use or operation of the Vessel including (but without limiting the generality of the foregoing) all freight, hire and passage moneys, income arising under pooling arrangements, compensation payable to the Borrower in the event of requisition of the Vessel for hire, remuneration for salvage and towage services, demurrage and detention moneys, and damages for breach (or payments for variation or termination) or any charterparty or other contract (including any contract of affreightment) for the employment of the Vessel;

4

 “Earnings Account” means an interest bearing USD account opened or to be opened with the Account Bank in the name of the Borrower designated “Kamsarmax One Shipping Ltd - Earnings Account” and includes any other account designated in writing by the Agent to be the Earnings Account for the purposes of this Agreement;

“EEA Member Country” means any member state of the European Union, Iceland, Liechtenstein and Norway;

“EIAPP Certificate” means the Engine International Air Pollution Prevention Certificate issued or to be issued pursuant to Annex VI of the International Convention for the Prevention of Pollution from Ships, MARPOL 73/78 (Regulations for the Prevention of Air Pollution from Ships) in relation to the Vessel;

“Encumbrance” means any mortgage, charge, pledge, lien, hypothecation, assignment, title retention, preferential right, option, trust arrangement or security interest or other encumbrance, security or arrangement conferring howsoever a priority of payment in respect of any obligation of any person (excluding preferential payment rights granted by preferred shares);

“Environmental Affiliate” means any agent or employee of the Borrower, the Corporate Guarantor, the Managers, any other Security Party or any other person having a contractual relationship with the Borrower, the Corporate Guarantor, any Manager or any other Security Party in connection with the Vessel or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from the Vessel;

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

“Environmental Claim” means (i) any claim by any applicable Government Entity alleging breach of, or non-compliance with, any Environmental Laws or Environmental Approvals or otherwise howsoever relating to or arising out of an Environmental Incident or (ii) any claim by any other third party howsoever relating to or arising out of an Environmental Incident (and, in each such case, “claim” shall include a claim for damages and/or direction for and/or enforcement relating to clean-up costs, removal, compliance, remedial action or otherwise) or (iii) any Proceedings arising from any of the foregoing;

“Environmental Incident” means, regardless of cause, (i) any discharge or release of Environmentally Sensitive Material from the Vessel; (ii) any incident in which Environmentally Sensitive Material is discharged or released from a vessel other than the Vessel which involves collision between the Vessel and such other vessel or some other incident of navigation or operation, in either case, where the Vessel, a Manager and/or the Borrower and/or the relevant Operator are actually, contingently or allegedly at fault or otherwise howsoever liable (in whole or in part) or (iii) any incident in which Environmentally Sensitive Material is discharged or released from a vessel other than the Vessel and where the Vessel is actually or reasonably likely to be arrested as a result and/or where a Manager and/or the Borrower and/or the relevant Operator are actually or contingently at fault or allegedly and reasonably likely to be found at fault or otherwise howsoever liable to any administrative or legal action;

“Environmental Laws” means all laws, regulations, conventions and agreements whatsoever relating to pollution, human or wildlife well-being or protection of the environment (including,

5

without limitation, the United States Oil Pollution Act of 1990 and any comparable laws of the individual States of the United States of America);

 

“Environmentally Sensitive Material” means oil, oil products or any other products or substance which are polluting, toxic or hazardous or any substance the release of which into the environment is howsoever regulated, prohibited or penalised by or pursuant to any Environmental Law;

“EU Bail-In Legislation Schedule” means the document described as such and published by the Loan Market Association (or any successor person) from time to time;

“Event of Default” means any of the events or circumstances listed in clause 10.1;

“Execution Date” means the date on which this Agreement has been executed by all the parties hereto;

“Extended Employment Contract” means any time charterparty, contract of affreightment or other contract of employment of the Vessel (including the entry of the Vessel in any pool) in a form and substance acceptable to the Agent which has a tenor of twelve (12) months or more (including any options to renew or extend such tenor);

“Facility Period” means the period starting on the date of this Agreement and ending on such date as all obligations whatsoever of all of the Security Parties under or pursuant to the Security Documents whensoever arising have been irrevocably paid, performed and/or complied with in full to the satisfaction of the Lenders;

“FATCA” means:

		(i)	sections 1471 to 1474 of the Code or any associated regulations or other official guidance;

		(ii)	any treaty, law, regulation or other official guidance enacted in any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of paragraph (a) above; or

		(iii)	any agreement pursuant to the implementation of paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction.

“FATCA Application Date” means:

		(i)	in relation to a “withholdable payment” described in section 1473(1)(A)(i) of the Code (which relates to payments of interest and certain other payments from sources within the US), 1 July 2014;

		(ii)	in relation to a “withholdable payment” described in section 1473(1)(A)(ii) of the Code (which relates to “gross proceeds” from the disposition of property of a type that can produce interest from sources within the US), 1 January 2017; or

		(iii)	in relation to a “passthru payment” described in section 1471(d)(7) of the Code not falling within paragraphs (a) or (b) above, 1 January 2017,

or, in each case, such other date from which such payment may become subject to a deduction or withholding required by FATCA as a result of any change in FATCA after the date of this Agreement.

6

 “FATCA Deduction” means a deduction or withholding from a payment under a Security Document required by or under FATCA;

“FATCA Exempt Party” means a party to a Security Document that is entitled to receive payments free from any FATCA Deduction;

“FATCA Protected Lender” means any Lender irrevocably designated as a FATCA Protected Lender by the Borrower by notice to that Lender and the Agent at least six months prior to the earliest FATCA Application Date for a payment by a Party to that Lender (or to the Agent for the account of that Lender);

“Flag State” means the Marshall Islands or such other state or territory agreed by the Agent, at the request of the Borrower, as the “Flag State” for the Vessel for the purposes of the Security Documents;

“General Assignment”  means, in respect of the Vessel, the deed of assignment of its Earnings, Insurances and Requisition Compensation executed or to be executed by the Borrower in favour of the Security Trustee in such form as the Agent and the Majority Lenders may require in their sole discretion;

“Government Entity” means any national or local government body, tribunal, court or regulatory or other agency and any organisation of which such body, tribunal, court or agency is a part or to which it is subject;

“Group” means the Corporate Guarantor and its subsidiaries;

“Group Member” means any member of the Group;

“IAPP Certificate” means the International Air Pollution Prevention Certificate issued or to be issued pursuant to Annex VI of the International Convention for the Prevention of Pollution from Ships, MARPOL 73/78 (Regulations for the Prevention of Air Pollution from Ships) in relation to the Vessel;

“Indebtedness” means any obligation howsoever arising (whether present or future, actual or contingent, secured or unsecured as principal, surety or otherwise) for the payment or repayment of money;

“Insurances” means all policies and contracts of insurance (which expression includes all entries of the Vessel in a protection and indemnity or war risks association) which are from time to time during the Facility Period in place or taken out or entered into by or for the benefit of the Borrower (whether in the sole name of the Borrower, or in the joint names of the Borrower and the Security Trustee or otherwise) in respect of the Vessel and her Earnings or otherwise howsoever in connection with the Vessel and all benefits thereof (including claims of whatsoever nature and return of premiums);

“Interest Payment Date” means the last day of an Interest Period and, if an Interest Period is longer than 6 months, the date falling at the end of each successive period of 6 months during such Interest Period starting from its commencement;

“Interest Period” means each period for the calculation of interest in respect of the Loan ascertained in accordance with the provisions of clause 3;

7

 “ISM Code Documentation” means the document of compliance (DOC) and safety management certificate (SMC) issued by a Classification Society pursuant to the ISM Code in relation to the Vessel within the periods specified by the ISM Code;

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

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

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

“Latest Accounts” means, in respect of any fiscal quarter or year of the Group, the latest quarterly unaudited consolidated financial statements or annual audited consolidated accounts of the Group required to be prepared pursuant to clause 8.1.6;

“Lenders”  means the banks listed in Schedule 1 and Transferee Lenders;

“Lending Branch” means, in respect of each Lender, its office or branch at the address set out beneath its name in Schedule 1 (or, in the case of a Transferee, in the Transfer Certificate to which it is a party as Transferee) or such other office or branch as any Lender shall from time to time select and notify through the Agent to the other parties to this Agreement;

“LIBOR” means the London Interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for USD for the relevant period at or about 11.00 a.m. on the relevant Quotation Day displayed on page LIBOR01 or LIBOR02 of the Reuters screen (or any replacement Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Reuters;

“Loan” means the aggregate principal amount in respect of the Loan Facility owing to the Lenders under this Agreement at any relevant time;

“Loan Facility” means the loan facility provided by the Lenders on the terms and subject to the conditions of this Agreement in the amount of up to USD16,560,000;

“Majority Lenders” means at any relevant time when there are two Lenders, both of them, and at any time when there are more than two Lenders, the Lenders whose Contributions exceed 75% of the Loan;

“Management Agreements” means, together, the agreements between the Borrower and the Managers, in a form previously approved in writing by the Agent (acting on the instructions of the Majority Lenders, such approval and instructions not to be unreasonably withheld);

“Managers” means together, the Commercial Manager and the Technical Manager;

“Manager’s Undertakings” means, collectively, the undertakings and assignments required to be executed hereunder by the Technical Manager and the Commercial Manager in favour of the Security Trustee in respect of the Vessel each in such form as the Agent and the Majority Lenders may require in their sole discretion and in the plural means both of them;

8

 “Margin” means 2.95% per annum;

“Master Agreement” means a 2002 ISDA Master Agreement (with Schedule thereto) made or to be made between the Lender and the Borrower;

“Master Agreement Security Deed” means the security deed in respect of the Master Agreement executed or to be executed by the Borrower in favour of the Lender in such form as the Lender may require;

“Material Adverse Effect” means in the opinion of the Majority Lenders a material adverse effect on (i) the Banks’ rights under, or the security provided by, any Security Document, (ii) the ability of any Security Party to perform or comply on time with any of its obligations under any Security Document to which it is a party or (iii) the value or nature of the property, assets, operations, liabilities or financial condition of the Borrower and/or the Corporate Guarantor;

“Maturity Date” means the earlier of (i) the date falling 7 years after the Delivery Date and (ii) 15 March 2023;

“MII & MAP Policy” means a mortgagee’s interest and pollution risks insurance policy (including additional perils (pollution) cover) in respect of the Vessel to be effected by the Security Trustee on the Drawdown Date to cover the Vessel as the same may be renewed or replaced annually thereafter and maintained throughout the Facility Period through such brokers, with such underwriters and containing such coverage as may be acceptable to the Security Trustee in its sole discretion, insuring a sum not exceeding one hundred and twenty per cent (120%) of the aggregate of the Loan and the Swap Exposure in respect of mortgagee’s interest insurance and one hundred and twenty per cent (120%) of the aggregate of the Loan and the Swap Exposure in respect of additional perils cover;

“MOA” means the memorandum of agreement dated 31 March 2014 (as the same may be amended and/or supplemented form time to time) made between the Seller as seller and the Borrower as buyer for the sale by the Seller, and the purchase by the Borrower, of the Vessel for a contract price of USD30,500,000 plus supervision costs in the amount of USD275,000 and extras;

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

“Mortgage” means, in respect of the Vessel, the first preferred mortgage thereof required to be executed hereunder by the Borrower in favour of the Security Trustee, in such form as the Agent and the Majority Lenders may require in their sole discretion;

“Net Worth”  means by reference to the Latest Accounts, the Total Assets less Total Liabilities of the Group;

9

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

“Party” means a party to this Agreement;

“Permitted Encumbrance” means any Encumbrance in favour of the Banks or any of them  created pursuant to the Security Documents, any Encumbrance created in favour of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses while the Borrower is actively prosecuting or defending such proceedings or arbitration in good faith; Encumbrances arising by operation of law in respect of taxes which are not overdue for payment or in respect of taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made and Permitted Liens;

“Permitted Liens” means any lien on the Vessel for master’s, officer’s or crew’s wages outstanding in the ordinary course of trading, any lien for salvage and any ship repairer’s or outfitter’s possessory lien for a sum not (except with the prior written consent of the Agent) exceeding the Casualty Amount (as defined in the Ship Security Documents) unless such person shall first have given to the Agent in terms satisfactory to it a written undertaking not to exercise any lien on the Vessel or her Earnings for the cost of such works;

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

“Proceedings” means any litigation, arbitration, legal action or complaint or judicial, quasi-judicial or administrative proceedings whatsoever arising or instigated by anyone (private or governmental) in any court, tribunal, public office or other forum whatsoever and wheresoever  (including, without limitation, any action for provisional or permanent attachment of any thing or for injunctive remedies or interim relief and any action instigated on an ex parte basis);

“Prohibited Person”  means any person with whom transactions are currently prohibited or restricted under the United States of America sanctions administered by the United States of America Department of Treasury’s Office of Foreign Assets Control (OFAC), any other United States of America government sanction, export or procurement laws or any other sanctions or other such restrictions on business dealings imposed by a member state of the European Union, including a person on any list of restricted entities, persons or organisations published by the United States of America government, the United Nations or the European Union or any member state of the European Union, including without limitation:

		(a)	the United States of America Government’s List of Specially Designated Nationals and Blocked Persons, Denied Persons List, Entities List, Debarred Parties List, Excluded Parties List and Terrorism Exclusion List;

		(b)	Her Majesty’s Treasury’s Consolidated List of Financial Sanctions Targets;

		(c)	the European Union Restricted Person Lists issued pursuant to Council Regulation (EC)  No. 881/2002 of 27 May 2002, Council Regulation (EC) No. 2580/2001 of 27 December 2001 and Council Common Position 2005/725/CFSP of 17 October 2005; and

		(d)	the United Nations Consolidated List established and maintained by the 1267 Committee;

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 “Quotation Day” means, in relation to any period for which an interest rate is to be determined, two (2) Banking Days before the first day of that period unless market practice differs in the London interbank market, in which case the Quotation Day will be determined by the Agent in accordance with market practice in the London interbank market (and if quotations would normally be given by leading banks in the London interbank market on more than one day, the Quotation Day will be the last of those days);

“Reference Banks” means the principal London offices of JP Morgan Chase, HSBC Bank Plc. and Bank of America, or such other banks as may be appointed by the Agent in consultation with the Borrower;

“Registry” means, in relation to the Vessel, the office of the registrar, commissioner or representative of the Flag State, who is duly empowered to register the Vessel, the Borrower’s title thereto and the Mortgage under the laws and flag of the Flag State;

“Release Date” means the date, being a Banking Day falling during the Drawdown Period, on which the Loan is, or is to be, paid to the Seller or, at the Borrower’s request, to the Builder;

“Repayment Dates” means, subject to clause 6.3, each of the dates falling at six-monthly intervals after the Delivery Date, up to and including the date falling 84 months after such date;

“Required Authorisation” means any authorisation, consent, declaration, licence, permit, exemption, approval or other document, whether imposed by or arising in connection with any law, regulation, custom, contract, security or otherwise howsoever which must be obtained at any time from any person, Government Entity, central bank or other self-regulating or supra-national authority in order to enable the Borrower lawfully to borrow the Loan and/or to enable any Security Party lawfully and continuously to continue its corporate existence and/or perform all its obligations whatsoever whensoever arising and/or grant security under the relevant Security Documents and/or to ensure the continuous validity and enforceability thereof;

“Required Charter” means the time charter made or to be made between the Borrower and the Approved Charterer as charterer of the Vessel for a period of four years (plus/minus 30 days in the Approved Charterer’s option) plus one year (plus/minus 30 days in the Approved Charterer’s option) in the Approved Charterer’s option, starting on the Delivery Date, and at a gross daily charterhire of USD14,100 for the first four years and USD14,350 for the optional year;

“Required Security Amount” means the amount in USD (as certified by the Agent) which is, for as long as the Vessel is employed under the Required Charter or any Extended Employment Contract at a rate of hire and for a duration acceptable to the Lenders, 125% of the aggregate of the Loan and the Swap Exposure and at all other times, 130% of the aggregate of the Loan and the Swap Exposure;

“Requisition Compensation” means all moneys or other compensation from time to time payable during the Facility Period by reason of Compulsory Acquisition of the Vessel;

“Resolution Authority” means any body which has authority to exercise any Write-down and Conversion Powers;

“Retention Account” means an interest bearing USD account opened or to be opened with the Account Bank in the name of the Borrower designated “Kamsarmax One Shipping Ltd -

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Retention Account” and includes any other account designated in writing by the Agent to be the Retention Account for the purposes of this Agreement;

 

“Retention Amount” means, in relation to any Retention Date, such sum as shall be the aggregate of:

		(a)	one sixth (1/6th) of the repayment instalment falling due for payment pursuant to clause 4.1.1 (as the same may have been reduced by any prepayment) on the next Repayment Date after the relevant Retention Date; and

		(b)	the applicable fraction (as hereinafter defined) of the aggregate amount of interest falling due for payment in respect of each part of the Loan during and at the end of each Interest Period current at the relevant Retention Date and, for this purpose, the expression “applicable fraction” in relation to each Interest Period shall mean a fraction having a numerator of one and a denominator equal to the number of Retention Dates falling within the relevant Interest Period;

“Retention Dates” means the date falling thirty (30) days after the Delivery Date and each of the dates falling at monthly intervals after such date and prior to the Maturity Date;

“Security Documents” means this Agreement, the Master Agreement, the Master Agreement Security Deed, the Mortgage, the Corporate Guarantee, the General Assignment, the Charter Assignment, the Accounts Pledge, the Manager’s Undertakings, the Shares Pledge, any Tripartite Deed and any other documents as may have been or shall from time to time after the date of this Agreement be executed to guarantee and/or to govern and/or secure all or any part of the Loan, interest thereon and other moneys from time to time owing by the Borrower pursuant to this Agreement and/or the Master Agreement (whether or not any such document also secures moneys from time to time owing pursuant to any other document or agreement);

“Security Party” means the Borrower, the Corporate Guarantor, the Managers or any other person who may at any time be a party to any of the Security Documents (other than the Banks);

“Security Trustee” means Norddeutsche Landesbank Girozentrale, acting for the purposes of this Agreement through its office at Friedrichswall 10, 30159 Hannover, Germany (or of such other address as may last have been notified to the other parties to this Agreement pursuant to clause 17.2.3) or such other person as may be appointed as Security Trustee and trustee by the Banks pursuant to clause 16.14;

“Security Value” means the amount in USD (as certified by the Agent) which is, at any relevant time, the aggregate of (a) the Valuation Amount of the Vessel as most recently determined in accordance with clause 8.2.2 (b) the balance standing to the credit of the Drydock Account and (c) the net realizable market value of any additional security for the time being actually provided to the Lenders pursuant to clause 8.2.1(b) it being agreed however that in case of additional security in the form of cash in Dollars, the same will be valued on a Dollar for Dollar basis;

“Seller” means Klaveness Bulk AS of Norway;

“Shares Pledge” means the pledge of the shares of and in the Borrower to be executed by the Corporate Guarantor in favour of the Security Trustee in such form as the Agent and the Majority Lenders may require in their sole discretion;

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“Shipbuilding Contract” means the contract dated 31 August 2013 (as amended by a novation agreement dated 25 September 2013, and addendum no.1 dated 18 October 2013 and an addendum no. 2 dated 24 September 2015 and as the same may be further amended and/or supplemented from time to time) made between the Builder as seller and the Seller as buyer for the construction by the Builder, and the purchase by the Seller, of the Vessel;

“Ship Security Documents” means, in relation to the Vessel, the Mortgage, the General Assignment, any Charter Assignment, any Tripartite Deed and the Manager’s Undertakings in respect thereof;

“Swap Bank” means Norddeutsche Landesbank Girozentrale, acting for the purposes of this Agreement through its office at Friedrichswall 10, 30159 Hannover, Germany (or of such other address as may last have been notified to the other parties to this Agreement);

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

“Taxes” includes all present and future income, corporation, capital or value-added taxes and all stamp and other taxes and levies, imposts, deductions, duties, charges and withholdings whatsoever together with interest thereon and penalties in respect thereto, if any, and charges, fees or other amounts made on or in respect thereof (and “Taxation” shall be construed accordingly);

“Technical Manager” means Euroseas Ltd., a company incorporated in the Marshall Islands with its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960 and having its place of business at 4 Messogiou & Evropis Street, 151 24 Maroussi, Greece or Eurobulk (Far East) Ltd. Inc., a company incorporated in the Philippines with its principal office at 12th Floor Ma. Natividad Bldg., 470 TM Kalaw cor., Sts., Ermita, Manila, Philippines or  Eurobulk Ltd. a company incorporated in Liberia and having its branch office at 4 Messogiou & Evropis Street, 151 24 Maroussi, Greece or any other person appointed by the Borrower, with the prior written consent of the Agent (such consent not to be unreasonably withheld), as the technical manager of the Vessel;

“Total Assets” and “Total Liabilities” mean, respectively, the total assets and total liabilities of the Group as evidenced at any relevant time by the Latest Accounts, in which they shall have been calculated by reference to the meanings assigned to them in accordance with International Financial Reporting Standards or US GAAP provided that the value of any ship shall be the value thereof calculated in accordance with Clause 8.2.2 and not as set out in the Latest Accounts;

 “Total Commitment” means, at any relevant time, the aggregate of the Commitments of all the Lenders at such time (being the aggregate of the sums set out opposite their names in Schedule 1);

“Total Loss” means, in relation to the Vessel:

		(c)	actual, constructive, compromised or arranged total loss of the Vessel; or

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	(d)	Compulsory Acquisition; or

		(e)	any hijacking, piracy, theft, condemnation, capture, seizure, arrest, detention or confiscation of the Vessel not falling within the definition of Compulsory Acquisition, unless the Vessel be released and restored to the Borrower within sixty (60) days after such incident;

“Transaction” means a Transaction as defined in the Master Agreement;

 “Transfer Certificate” means a certificate in substantially the form set out in Schedule 4;

“Transferee Lender” has the meaning ascribed thereto in clause 15.3;

“Transferor Lender” has the meaning ascribed thereto in clause 15.3;

“Tripartite Deed” means, if the Vessel is subject to a bareboat charter, a deed containing (inter alia) an assignment of the relevant charterer’s interest in the insurances of the Vessel, required to be executed by Borrower and the relevant charterer in favour of the Lender in such form as the Lender may require in its sole discretion;

“Trust Deed” means a trust deed in the form, or substantially in the form, set out in Schedule 5;

“Trust Property” means (i) the security, powers, rights, titles, benefits and interests (both present and future) constituted by and conferred on the Banks or any of them under or pursuant to the Security Documents (including, without limitation, the benefit of all covenants, undertakings, representations, warranties and obligations given, made or undertaken to any Bank in the Security Documents), (ii) all moneys, property and other assets paid or transferred to or vested in any Bank (or anyone else on such Bank’s behalf) or received or recovered by any Bank (or anyone else on such Bank’s behalf) pursuant to, or in connection with, any of the Security Documents whether from any Security Party or any other person and (iii) all moneys, investments, property and other assets at any time representing or deriving from any of the foregoing, including all interest, income and other sums at any time received or receivable by any Bank (or anyone else on such Bank’s behalf) in respect of the same (or any part thereof);

“Underlying Documents” means, together, the MOA, the Required Charter, the Management Agreements, any Extended Employment Contract;

“Unlawfulness” means any event or circumstance which either is or, as the case may be, might in the opinion of the Agent become the subject of a notification by the Agent to the Borrower under clause 12.1;

“US” means the United States of America;

“Valuation Amount” means the value of the Vessel as most recently determined under clause 8.2.2;

“Vessel” means the Kamsarmax bulk carrier of approximately 82,000 dwt under construction by the Builder for the Seller with Builder’s Hull No. YZJ2013-1116 and IMO No. 9711133 and to be purchased by the Borrower from the Seller pursuant to the MOA and registered on the flag of the Flag State with the name “XENIA”; and

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“Write-down and Conversion Powers” means, in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule.

	1.3	Construction

In this Agreement, unless the context otherwise requires:

	1.3.1	clause headings and the index are inserted for convenience of reference only and shall be ignored in the construction of this Agreement;

	1.3.2	references to clauses and schedules are to be construed as references to clauses of, and schedules to, this Agreement and references to this Agreement include its schedules and any supplemental agreements executed pursuant hereto;

	1.3.3	references to (or to any specified provision of) this Agreement or any other document shall be construed as references to this Agreement, that provision or that document as in force for the time being and as duly amended and/or supplemented and/or novated;

	1.3.4	references to a “regulation” include any present or future regulation, rule, directive, requirement, request or guideline (whether or not having the force of law) of any Government Entity, central bank or any self-regulatory or other supra-national authority (including, without limitation, any regulation implementing or complying with (1) the “International Convergence of Capital Measurement and Capital Standards, a Revised Framework” published by the Basel Committee on Banking Supervision in June 2004, in the form existing on the date of this Agreement (“Basel II”), and/or (2) “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Basel III: A global regulatory framework for more resilient banks and banking systems”, published by the Basel Committee on Banking Supervision in December 2010, in the form existing on the date of this Agreement (“Basel III”) and (3) any other law or regulation which, at any time and from time to time, implements and/or amends and/or supplements and/or re-enacts and/or supersedes, whether in whole or in part, Basel II and/or Basel III, and whether such implementation, application or compliance is by a Government Entity, a lender or any company affiliated to it);

	1.3.5	references to any person in or party to this Agreement shall include reference to such person’s lawful successors and assigns and references to a Lender shall also include a Transferee Lender;

	1.3.6	words importing the plural shall include the singular and vice versa;

	1.3.7	references to a time of day are, unless otherwise stated, to London time;

	1.3.8	references to a person shall be construed as references to an individual, firm, company, corporation or unincorporated body of persons or any Government Entity;

	1.3.9	references to a “guarantee” include references to an indemnity or any other kind of assurance whatsoever (including, without limitation, any kind of negotiable instrument, bill or note) against financial loss or other liability including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and “guaranteed” shall be construed accordingly;

	1.3.10	references to any statute or other legislative provision are to be construed as references to any such statute or other legislative provision as the same may be re-enacted or modified or substituted by any subsequent statute or legislative provision (whether before or after the date hereof) and shall include any regulations, orders, instruments or other subordinate legislation issued or made under such statute or legislative provision;

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	1.3.11	a certificate by the Agent or the Security Trustee as to any amount due or calculation made or any matter whatsoever determined in connection with this Agreement shall be conclusive and binding on the Borrower except for manifest error;

	1.3.12	if any document, term or other matter or thing is required to be approved, agreed or consented to by any of the Banks such approval, agreement or consent must be obtained in writing unless the contrary is stated;

	1.3.13	time shall be of the essence in respect of all obligations whatsoever of the Borrower under this Agreement, howsoever and whensoever arising;

	1.3.14	and the words “other” and “otherwise” shall not be construed eiusdem generis with any foregoing words where a wider construction is possible.

	1.4	Accounting terms and references to currencies

Currencies are referred to in this Agreement by the three letter currency codes (ISO 4217) allocated to them by the International Organisation for Standardisation.

	1.5	Contracts (Rights of Third Parties Act) 1999

Except for clause 19, no part of this Agreement shall be enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Agreement.

	1.6	Majority Lenders

Where this Agreement or any other Security Document provides for any matter to be determined by reference to the opinion of the Majority Lenders or to be subject to the consent or request of the Majority Lenders or for any decision or action to be taken on the instructions in writing of the Majority Lenders, such opinion, consent, request or instructions shall (as between the Lenders) only be regarded as having been validly given or issued by the Majority Lenders if all the Lenders with a Commitment and/or Contribution shall have received prior notice of the matter on which such opinion, consent, request or instructions are required to be obtained and the relevant majority of such Lenders shall have given or issued such opinion, consent, request or instructions but so that (as between the Borrower and the Banks) the Borrower shall be entitled to assume that such notice shall have been duly received by each relevant Lender and that the relevant majority shall have been obtained to constitute Majority Lenders whether or not this is in fact the case.

	2	THE AVAILABLE COMMITMENT AND CANCELLATION

	2.1	Agreement to lend

The Lenders, relying upon each of the representations and warranties in clause 7, agree to provide to the Borrower upon and subject to the terms of this Agreement, a loan facility in an amount not exceeding the lesser of (a) sixteen million five hundred and sixty thousand Dollars (USD16,560,000) and (b) 69% of the Valuation Amount of the Vessel (to be determined no more than three weeks prior to the Drawdown Date), for the purpose of part-financing the purchase of the Vessel by the Borrower, by making Advance A and Advance B available simultaneously.

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Subject to the terms of this Agreement, the obligations of the Lenders shall be to contribute to each Advance the proportion to each Advance which their respective Commitments bear to the  Total Commitment on the Drawdown Date.

 

	2.2	Obligations several

The obligations of the Lenders under this Agreement are several according to their respective Commitments and/or Contributions. The failure of any Lender to perform such obligations shall not relieve any other party to this Agreement of any of its respective obligations or liabilities under this Agreement nor shall any Bank be responsible for the obligations of any other Bank (except for its own obligations, if any, as a Lender) under this Agreement.

	2.3	Interests several

Notwithstanding any other term of this Agreement (but without prejudice to the provisions of this Agreement relating to or requiring action by the Majority Lenders) the interests of the Banks are several and the amount due to any Bank is a separate and independent debt.  Each Bank shall have the right to protect and enforce its rights arising out of this Agreement and it shall not be necessary for any other Bank to be joined as an additional party in any Proceedings for this purpose.

	2.4	Drawdown

	2.4.1	On the terms and subject to the conditions of this Agreement, the Loan shall be advanced to the Borrower on the Drawdown Date following receipt by the Agent from the Borrower of a Drawdown Notice not later than 11:00 a.m. Hannover time on the third Banking Day before the proposed Drawdown Date.

	2.4.2	The Drawdown Notice shall be effective on actual receipt by the Agent and, once given, shall, subject as provided in clause 3.6, be irrevocable.

	2.5	Limitation and application of the Loan

	2.5.1	The amount of the Loan shall not exceed the lesser of (i) 69% of the Valuation Amount of the Vessel (to be determined no more than three weeks prior to the Drawdown Date) (the “Maximum Loan Amount”) and (ii) USD16,560,000.

	2.5.2	If on the Drawdown Date the Maximum Loan Amount is less than USD16,560,000 the Total Commitment shall be reduced by an amount equal to the shortfall by reducing first the amount of Advance B and thereafter the amount of Advance A.

	2.6	Availability

Upon receipt of a Drawdown Notice complying with the terms of this Agreement, the Agent shall promptly notify each Lender and each Lender shall make available to the Agent its portion of the Loan for payment by the Agent in accordance with clause 6.2.  The Borrower acknowledges that payment of the Loan to the account referred to in the Drawdown Notice shall satisfy the obligation of the Lenders to lend the Loan to the Borrower under this Agreement.

	2.7	Cancellation in changed circumstances

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The Borrower may also at any time during the Facility Period by notice to the Agent (effective only on actual receipt) prepay and cancel with effect from a date not less than ten (10) Banking Days after receipt by the Agent of such notice, the whole but not part only, but without prejudice to the Borrower’s obligations under clauses 6.6 and 12, of the Contribution and Commitment (if any) of any Lender to which the Borrower shall have become obliged to pay additional amounts under clause 12 or clause 6.6. Upon any notice of such prepayment and cancellation being given, the Commitment of the relevant Lender shall be reduced to zero, the Borrower shall be obliged to prepay the Contribution of such Lender and such Lender’s related costs (including but not limited to Break Costs, if any) but without any premium or penalty on the next Interest Payment Date and such Lender shall be under no obligation to participate in the Loan.

 

	2.8	Use of proceeds

Without prejudice to the Borrower’s obligations under clause 8.1.4, no Bank shall have any responsibility for the application of the proceeds of the Loan or any part thereof by the Borrower.

	3	INTEREST AND INTEREST PERIODS

	3.1	Normal interest rate

The Borrower must pay interest on the Loan in respect of each Interest Period on each Interest Payment Date at the rate per annum determined by the Agent to be the aggregate of (a) the Margin and (b) LIBOR for such period.

	3.2	Selection of Interest Periods

Each Interest Period shall have a duration of:

		(a)	6 months as notified by the Borrower to the Agent not later than 11.00 a.m. (Hannover time) 2 Banking Days before the commencement of such Interest Period if no such other period is agreed by the Borrower and the Agent in accordance with paragraph (b); or

		(b)	such other period as the Agent may, with the authorisation of the Majority Lenders, agree with the Borrower.

	3.3	Determination of Interest Periods

Subject to Clauses 3.3.1 and 3.4 every Interest Period shall be of the duration agreed pursuant to clause 3.2 but so that:

	3.3.1	the first Interest Period shall start on the Drawdown Date, and each subsequent Interest Period shall start on the last day of the previous Interest Period;

	3.3.3	if any Interest Period would otherwise overrun a Repayment Date, then, in the case of the last Repayment Date, such Interest Period shall end on such Repayment Date, and in the case of any other Repayment Date the Loan shall be divided into parts so that there is one part in the amount of the repayment instalment due on such Repayment Date and having an Interest Period ending on the relevant Repayment Date and another part in the amount of the balance of the Loan having an Interest Period ascertained in accordance with clause 3.2 and the other provisions of this clause 3.3.

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3.4

	Default interest

            

If the Borrower fails to pay any sum (including, without limitation, any sum payable pursuant to this clause 3.4) on its due date for payment under any of the Security Documents (other than the Master Agreement), the Borrower must pay interest on such sum on demand from the due date up to the date of actual payment (as well after as before judgment) at a rate determined by the Agent pursuant to this clause 3.4.  The period starting on such due date and ending on such date of payment shall be divided into successive periods of not more than six (6) months as selected by the Agent each of which (other than the first, which shall start on such due date) shall start on the last day of the preceding such period.  The rate of interest applicable to each such period shall be the aggregate (as determined by the Agent) of (a) two per cent (2%) per annum, (b) the Margin and (c) LIBOR for such periods.  Such interest shall be due and payable on demand, or, if no demand is made, then on the last day of each such period as determined by the Agent and on the day on which all amounts in respect of which interest is being paid under this Clause are paid, and each such day shall, for the purposes of this Agreement, be treated as an Interest Payment Date, provided that if such unpaid sum is an amount of principal which became due and payable by reason of a declaration by the Agent under clause 10.2.2 or a prepayment pursuant to clauses 4.3, 4.4, 8.2.1(a) or 12.1, on a date other than an Interest Payment Date relating thereto, the first such period selected by the Agent shall be of a duration equal to the period between the due date of such principal sum and such Interest Payment Date and interest shall be payable on such principal sum during such period at a rate of two per cent (2%) above the rate applicable thereto immediately before it shall have become so due and payable.  If, for the reasons specified in clause 3.6.1, the Agent is unable to determine a rate in accordance with the foregoing provisions of this clause 3.4, each Lender shall promptly notify the Agent of the cost of funds to such Lender and interest on any sum not paid on its due date for payment shall be calculated at a rate determined by the Agent to be two per cent (2%) per annum above the aggregate of the Margin and the arithmetic mean of the cost of funds to the Lenders compounded at such intervals as the Agent selects.

	3.5	Notification of Interest Periods and interest rate

The Agent agrees to notify (i) the Lenders promptly of the duration of each Interest Period and (ii) the Borrower and the Lenders promptly of each rate of interest determined by it under this clause 3.

	3.6	Market disruption

	3.6.1	If a Market Disruption Event occurs in relation to the Loan for any Interest Period, then the rate of interest on each Lender’s share of the Loan for the Interest Period shall be the rate per annum which is the sum of:

		(a)	the Margin; and

		(b)	the rate notified to the Agent by that Lender as soon as practicable and in any event before interest is due to be paid in respect of that Interest Period, to be that which expresses as a percentage rate per annum the cost to that Lender of funding its participation in the Loan from whatever source it may reasonably select.

	3.6.2	In this Agreement “Market Disruption Event” means that:

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		(a)	at or about noon on the Quotation Day for the relevant Interest Period LIBOR is to be determined and none of the Reference Banks supplies a rate to the Agent to determine LIBOR for dollars for the relevant Interest Period; or

		(b)	before close of business in London on the Quotation Day for the relevant Interest Period, the Agent receives notifications from a Lender or Lenders (whose participations in the Loan exceed thirty five per cent. of the Loan) that the cost to it or them of obtaining matching deposits in the London interbank market would be in excess of LIBOR.

	3.7	Alternative basis of interest or funding

	3.7.1	If a Market Disruption Event occurs and the Agent or Borrower so require, the Agent and the Borrowers shall enter into negotiations (for a period of not more than thirty (30) days) with a view to agreeing a substitute basis for determining the rate of interest.

	3.7.2	Any substitute or alternative basis agreed pursuant to Clause 3.7.1 above shall, with the prior consent of all the Lenders and the Borrower, be binding on all Parties.

	3.7.3	If a Market Disruption Event occurs before the Loan is made available, the Lenders’ obligation to make the Loan available shall be suspended while the circumstances giving rise to the Market Disruption Event continue.

	3.7.4	If the Borrower does not agree with an interest rate set by the Agent under Clause 3.7.1 the Borrower may give the Agent not less than five (5) Banking Days’ notice of its intention to prepay the Loan or, as the case may be, the affected Lender’s Contribution, at the end of the next Interest Period.

	3.7.5	A notice under Clause 3.7.4 shall be irrevocable. The Agent shall promptly notify the Lenders or (as the case may require) the affected Lender of the Borrower’s notice of intended prepayment; and:

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

		(b)	at the end of the next Interest Period, the Borrower shall prepay (without premium or penalty) the Loan or, as the case may be, the affected Lender’s Contribution, together with accrued interest thereon at the rate certified by the Agent and notified to the Borrower as being a reasonable interest reflecting the cost to the Lenders or, as the case may be, the affected Lender, of funding the Loan during the period ending on the date of such prepayment, plus the Margin.

	4	REPAYMENT AND PREPAYMENT

	4.1	Repayment

	4.1.1	Subject as otherwise provided in this Agreement, the Borrower must repay:

		(a)	Advance A by fourteen (14) semi-annual instalments of four hundred and sixty seven thousand Dollars (USD467,000) each, one such instalment to be repaid on each of the Repayment Dates, and a balloon instalment of seven million four hundred and sixty two thousand Dollars (USD7,462,000) (the “Balloon Instalment”) to be repaid on the final Repayment Date; and

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		(b)	Advance B by eight (8) semi-annual instalments of three hundred and twenty thousand Dollars (USD320,000) each, one such instalment to be repaid on each of the Repayment Dates.

If the Commitment in respect of Advance B is not drawn in full, the amount of each repayment instalment for Advance B shall be reduced proportionately and if the Commitment in respect of Advance A is not drawn in full, the amount of each repayment instalment for Advance A shall be reduced in inverse order of maturity, commencing with the Balloon Instalment.

	4.1.2	The Borrower shall on the Maturity Date also pay to the Agent and the Lenders all other amounts in respect of interest or otherwise then due and payable under this Agreement and the Security Documents.

	4.2	Voluntary prepayment

Subject to clauses 4.5 and 4.6 the Borrower may prepay the Loan in whole or part (such part being in an amount of five hundred thousand Dollars (USD500,000) or any larger sum which is an integral multiple of such amount) on any Interest Payment Date relating to the part of the Loan to be repaid without (subject to Clause 4.5.3) premium or penalty.

	4.3	Mandatory Prepayment on Total Loss

On the date falling one hundred and twenty (120) days after that on which the Vessel became a Total Loss or, if earlier, on the date upon which the insurance proceeds are, or Requisition Compensation is, received by the Borrower (or the Security Trustee or any other Bank pursuant to the Security Documents), the Borrower must prepay the Loan in full and all other sums outstanding and owing to the Banks under this Agreement and the Security Documents at that time.

	4.3.1	Interpretation

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

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

		(b)	in the case of a constructive total loss of the Vessel, upon the date and at the time notice of abandonment of the ship is given to the then insurers of the Vessel (provided a claim for total loss is admitted by such insurers) or, if such insurers do not immediately admit such a claim, at the date and at the time at which either a total loss is subsequently admitted by such insurers or a total loss is subsequently adjudged by a competent court of law or arbitration tribunal to have occurred;

		(c)	in the case of a compromised or arranged total loss of the Vessel, on the date upon which a binding agreement as to such compromised or arranged total loss has been entered into by the then insurers of the Vessel;

		(d)	in the case of Compulsory Acquisition, on the date upon which the relevant requisition of title or other compulsory acquisition occurs; and

		(e)	in the case of hijacking, piracy, theft, condemnation, capture, seizure, arrest, detention or confiscation of the Vessel (other than within the definition of Compulsory Acquisition), which deprives the Borrower of the use of the Vessel for more than sixty (60) days, upon the expiry of such sixty (60) day period.

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	4.4	Mandatory prepayment on sale of the Vessel

On the date of completion of the sale of the Vessel the Borrower must prepay the Loan in full and all other sums outstanding and owing to the Banks under this Agreement and the Security Documents at that time.

	4.5	Amounts payable on prepayment

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

	4.5.1	accrued interest on the amount to be prepaid to the date of such prepayment;

	4.5.2	any additional amount payable under clauses 3.5, 6.6 or 12.2;

	4.5.3	if any prepayment of the Loan is made under clause 4.2 or 4.4 prior to the second anniversary of the Drawdown Date, a prepayment fee of 1% of the amount so prepaid; and

	4.5.4	all other sums payable by the Borrower to the Banks under this Agreement or any of the other Security Documents including, without limitation any Break Costs.

	4.6	Notice of prepayment; reduction of maximum loan amount

	4.6.1	No prepayment may be effected under clause 4.2 unless the Borrower shall have given the Agent at least ten (10) Banking Days prior written notice of its intention to make such prepayment.  Every notice of prepayment shall be effective only on actual receipt by the Agent, shall be irrevocable, shall specify the amount to be prepaid and shall oblige the Borrower to make such prepayment on the date specified.

	4.6.2	Subject to the other provisions of this Agreement and in particular Clause 2.6, no amount repaid or prepaid under this Clause 4 in respect of the Loan may be reborrowed.

	4.6.3	Any amounts prepaid pursuant to clause 4.2 shall be applied pro rata against the Advances in reducing the repayment instalments (a) in the case of Advance A, in inverse order of maturity, starting with the Balloon Instalment and (b) in the case of Advance B, pro rata.

	4.6.4	The Borrower may not prepay any part of the Loan except as expressly provided in this Agreement.

	4.7	Master Agreement, Repayments and Prepayments

	4.7.1	If less than the full amount of the Loan remains outstanding following a prepayment and the Swap Bank agrees, following a written request of the Borrower, that the Borrower may maintain all or part of a Transaction in an amount not wholly matched with or linked to all or part of the Loan, the Borrower shall within fifteen (15) days of being notified by the Swap Bank of such requirement, provide the Swap Bank with such additional security as shall be adequate to secure the performance of such Transaction, which additional security shall take such form, be constituted by such documentation and be entered into between such parties, as the Swap Bank may approve or require, and each document comprising such additional security shall constitute a Credit Support Document.

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	4.7.2	The Borrower shall on the first written demand of the Swap Bank indemnify the Swap Bank in respect of all losses, costs and expenses (including, but not limited to, legal costs and expenses) incurred or sustained by the Swap Bank as a consequence of or in relation to the effecting of any matter or transactions referred to in this clause 4.7.

	5	FEES AND EXPENSES

	5.1	Commission

	5.1.1	The Borrower agrees to pay to the Agent for the account of the Lenders pro rata in accordance with their respective Commitments on the Execution Date and each of the dates falling at three (3) monthly intervals after the Execution Date until the end of the Drawdown Period and on the last day of the Drawdown Period commitment commission computed from 18 December 2015 at a rate of zero point seven five per cent (0.75%) per annum on the daily amount of the undrawn Loan Facility.

	5.1.2	The commission referred to in clause 5.1.1 must be paid by the Borrower to the Agent, whether or not any part of the Total Commitment is ever advanced and shall be non-refundable.

	5.2	Structuring Fee

The Borrower shall pay to the Agent for its own account on the Execution Date a non-refundable structuring fee of USD165,600.

	5.3	Administration fee

The Borrower shall pay to the Agent for its own account on the Execution Date and annually thereafter an administration fee of USD2,500.

	5.4	Cancellation fee

The Borrower shall pay to the Agent on the earliest of (i) the Drawdown Date and (ii) last day of the Drawdown Period a cancellation fee of 1% of the amount of the Total Commitment which the Borrower has voluntarily cancelled or voluntarily not drawn.

	5.5	Expenses

The Borrower agrees to reimburse the Banks on a full indemnity basis on demand all expenses and/or disbursements whatsoever (including without limitation legal expenses and expenses related to the provision of legal and insurance opinions referred to in Schedule 3) certified by the Banks or any of them as having been incurred by them from time to time:

	5.5.1	in connection with the negotiation, preparation, execution (even if the transactions contemplated hereby do not materialise for any reasons attributable to the Borrower) and, where relevant, registration of the Security Documents and of any actual amendment, or indulgence or the granting of any waiver or consent howsoever in connection with, any of the Security Documents (including legal fees); and

	5.5.2	in contemplation or furtherance of, or otherwise howsoever in connection with, the exercise or enforcement of, or preservation of any rights, powers, remedies or discretions under any of the Security Documents, or in consideration of the Banks’ rights thereunder or any action proposed or taken following the occurrence of a Default which is continuing or otherwise in respect of the moneys owing under any of the Security Documents,

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together with interest at the rate referred to in clause 3.4 from the date on which reimbursement of such expenses and/or disbursements were due following demand to the date of payment (as well after as before judgment).

 

	5.6	Value added tax

All fees and expenses payable pursuant to this Agreement must be paid together with value added tax or any similar tax (if any) properly chargeable thereon in any jurisdiction.  Any value added tax chargeable in respect of any services supplied by the Banks or any of them under this Agreement shall, on delivery of the value added tax invoice, be paid in addition to any sum agreed to be paid hereunder.

	5.7	Stamp and other duties

The Borrower must pay all stamp, documentary, registration or other like duties or taxes (including any duties or taxes payable by any of the Banks but excluding any FATCA Deduction) imposed on or in connection with any of the Underlying Documents, the Security Documents or the Loan and agree to indemnify the Banks or any of them against any liability arising by reason of any delay or omission by the Borrower to pay such duties or taxes.

	6	PAYMENTS AND TAXES; ACCOUNTS AND CALCULATIONS

	6.1	No set-off or counterclaim

All payments to be made by the Borrower under any of the Security Documents must be made in full, without any set off or counterclaim whatsoever and, subject as provided in clause 6.6, free and clear of any deductions or withholdings, in USD on or before 11:00 am New York time on the due date in freely available funds to such account at such bank and in such place as the Agent may from time to time specify for this purpose.  Save as otherwise provided in this Agreement or any other relevant Security Documents, such payments shall be for the account of all Lenders and the Agent shall distribute such payments in like funds as are received by the Agent to the Lenders rateably, in the proportions which their respective Contributions bear to the aggregate of the Loan on the date on which such payment is made.

	6.2	Payment by the Lenders

All sums to be advanced by the Lenders to the Borrower under this Agreement shall be remitted in USD on the Drawdown Date to the account of the Agent at such bank as the Agent may have notified to the Lenders and shall be paid by the Agent on such date in like funds as are received by the Agent to the account specified in the Drawdown Notice.

	6.3	Non-Banking Days

When any payment under any of the Security Documents would otherwise be due on a day which is not a Banking Day, the due date for payment shall be extended to the next following Banking Day unless such Banking Day falls in the next calendar month in which case payment shall be made on the immediately preceding Banking Day.

	6.4	Calculations

All interest and other payments of an annual nature under any of the Security Documents shall accrue from day to day and be calculated on the basis of actual days elapsed and a three hundred and sixty (360) day year.

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	6.5	Currency of account

If any sum due from the Borrower under any of the Security Documents, or under any order or judgment given or made in relation thereto, must be converted from the currency (“the first currency”) in which the same is payable thereunder into another currency (“the second currency”) for the purpose of (i) making or filing a claim or proof against the Borrower, (ii) obtaining an order or judgment in any court or other tribunal or (iii) enforcing any order or judgment given or made in relation thereto, the Borrower undertakes to indemnify and hold harmless each Bank from and against any loss suffered as a result of any discrepancy between (a) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (b) the rate or rates of exchange at which each Bank may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof.  Any amount due from the Borrower under this clause 6.5 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of any of the Security Documents and the term “rate of exchange” includes any premium and costs of exchange payable in connection with the purchase of the first currency with the second currency.

	6.6	Grossing-up for Taxes - by the Borrower

If at any time the Borrower must make any deduction or withholding in respect of Taxes (other than a FATCA Deduction) or deduction in respect of any duty, assessment or other charge or otherwise from any payment due under any of the Security Documents for the account of any Bank or if the Agent or the Security Trustee must make any deduction or withholding from a payment to another Bank or withholding in respect of Taxes from any payment due under any of the Security Documents, the sum due from the Borrower in respect of such payment must be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the relevant Bank receives on the due date for such payment (and retains, free from any liability in respect of such deduction or withholding), a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made and the Borrower must indemnify each Bank against any losses or costs incurred by it by reason of any failure of the Borrower to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. Provided however that if any Bank or the Agent or the Security Trustee shall be or become entitled to any Tax credit or relief in respect of any Tax which is deducted from any payment by the Borrower and it actually receives a benefit from such Tax credit or relief in its country of domicile, incorporation or residence, the relevant Bank or the Agent or the Security Trustee, as the case may be, shall, subject to any laws or regulations applicable thereto, pay to the Borrower after such benefit is effectively received by the relevant Bank or the Agent or the Security Trustee, as the case may be, such amounts (which shall be conclusively certified by the Agent) as shall ensure that the net amount actually retained by the relevant Bank or the Agent or the Security Trustee, as the case may be, is equal to the amount which would have been retained if there had been no such deduction. The Borrower must promptly deliver to the Agent any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid.

This clause 6.6 does not apply to any sums due from the Borrower to the Lender under or in connection with the Master Agreement in respect of which sums the provisions of the Master Agreement shall apply.

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	6.7	Grossing-up for Taxes - by the Lenders

If at any time a Lender must make any deduction or withholding in respect of Taxes from any payment due under any of the Security Documents for the account of the Agent or the Security Trustee, the sum due from such Lender in respect of such payment must be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Agent or, as the case may be, the Security Trustee receives on the due date for such payment (and retains free from any liability in respect of such deduction or withholding) a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made and each Lender must indemnify the Agent and the Security Trustee against any losses or costs incurred by it by reason of any failure of such Lender to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment.

 

	6.8	Loan account

Each Lender 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.  The Agent and/or the Security Trustee shall maintain a control account showing the Loan and other sums owing by the Borrower under the Security Documents and all payments in respect thereof being made from time to time.  The control account shall, in the absence of manifest error, be prima facie evidence of the amount from time to time owing by the Borrower under the Security Documents.

	6.9	Agent may assume receipt

Where any sum is to be paid under the Security Documents to the Agent or, as the case may be, the Security Trustee for the account of another person, the Agent or, as the case may be, the Security Trustee may assume that the payment will be made when due and the Agent or, as the case may be, the Security Trustee may (but shall not be obliged to) make such sum available to the person so entitled.  If it proves to be the case that such payment was not made to the Agent or, as the case may be, the Security Trustee, then the person to whom such sum was so made available must on request refund such sum to the Agent or, as the case may be, the Security Trustee together with interest thereon sufficient to compensate the Agent or, as the case may be, the Security Trustee for the cost of making available such sum up to the date of such repayment and the person by whom such sum was payable must indemnify the Agent or, as the case may be, the Security Trustee for any and all loss or expense which the Agent or, as the case may be, the Security Trustee may sustain or incur as a consequence of such sum not having been paid on its due date.

	6.10	Partial payments

If, on any date on which a payment is due to be made by the Borrower under any of the Security Documents, the amount received by the Agent from the Borrower falls short of the total amount of the payment due to be made by the Borrower on such date then, without prejudice to any rights or remedies available to the Agent, the Security Trustee and the Lenders under any of the Security Documents, the Agent must apply the amount actually received from the Borrower in or towards discharge of the obligations of the Borrower under the Security Documents in the following order, notwithstanding any appropriation made, or purported to be made, by the Borrower:

	6.10.1	first, in or towards payment, on a pro-rata basis, of any unpaid costs and expenses of the Agent and the Security Trustee under any of the Security Documents;

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	6.10.2	secondly, in or towards payment of any fees payable to the Agent or any of the other Banks under, or in relation to, the Security Documents which remain unpaid;

	6.10.3	thirdly, in or towards payment to the Lenders, on a pro rata basis, of any accrued interest and interest owing in respect of the Loan which shall have become due under any of the Security Documents but remains unpaid;

	6.10.4	fourthly, in or towards payment to the Lenders, on a pro rata basis, of any principal in respect of the Loan which shall have become due but remains unpaid and in or towards payment to the Swap Bank of any sum which shall have become due under the Master Agreement but remains unpaid;

	6.10.5	fifthly, in or towards payment to the Lenders, on a pro rata basis, any Break Costs and any other sum relating to the Loan which shall have become due under any of the Security Documents but remains unpaid; and

	6.10.6	sixthly, in or towards payment to the relevant person of any other sum which shall have become due under any of the Security Documents but remains unpaid (and, if more than one such sum so remains unpaid, on a pro rata basis).

The order of application set out in clauses 6.10.1 to 6.10.6 may be varied by the Agent if the Majority Lenders so direct, without any reference to, or consent or approval from, the Borrower.

	6.11	FATCA

	6.11.1	FATCA Information

		(a)	Subject to subclause (c) below, each party to a Security Document shall, within ten (10) Banking Days of a reasonable request by another party to the Security Documents:

		(i)	confirm to that other party whether it is a FATCA Exempt Party or is not a FATCA Exempt Party; and

		(ii)	supply to the requesting party such forms, documentation and other information relating to its status under FATCA (including its applicable “passthru percentage” or other information required under the regulations of the US Treasury Department or other official guidance including intergovernmental agreements) as the requesting party reasonably requests for the purposes of such requesting party’s compliance with FATCA.

		(b)	If a party to any Security Document confirms to another party pursuant to subclause (a) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that party shall notify that other party and the Agent reasonably promptly.

		(c)	Subclause (a) above shall not oblige any Lender to do anything which would or might in its reasonable opinion constitute a breach of any law or regulation, any policy of that Lender, any fiduciary duty or any duty of confidentiality, or to disclose any confidential information (including, without limitation, its tax returns and calculations); provided, however, that information required (or equivalent to the information so required) by United States Internal Revenue Service Forms W-8 or W-9 (or any successor forms) shall not be treated as confidential information of such Lender for purposes of this subclause (c).

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		(d)	If a party to any Security Document fails to confirm its status or to supply forms, documentation or other information requested in accordance with subclause (a) above (including, for the avoidance of doubt, where subclause (c) above applies), then

		(i)	if that party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such party shall be treated for the purposes of the Security Documents as if it is not a FATCA Exempt Party; and

		(ii)	if that party failed to confirm its applicable passthru percentage then such party shall be treated for the purposes of the Security Documents (and payments made thereunder) as if its applicable passthru percentage is 100%,

until (in each case) such time as the party in question provides the requested confirmation, forms, documentation or other information.

	6.11.2	FATCA Deduction

		(a)	Each Party may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.

		(b)	Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction) notify the Party to whom it is making the payment and, in addition, shall notify the Borrower, the Agent and the other Banks.

	7	REPRESENTATIONS AND WARRANTIES

	7.1	Continuing representations and warranties

The Borrower represents and warrants to each Bank that:

	7.1.1	Due incorporation

each of the Security Parties is duly incorporated and validly existing in good standing, under the laws of its respective country of incorporation, in each case, as a corporation and has power to carry on its respective businesses as it is now being conducted and to own their respective property and other assets to which it has unencumbered legal and beneficial title;

	7.1.2	Corporate power

each of the Security Parties has power to execute, deliver and perform its obligations and, as the case may be, to exercise its rights under the Underlying Documents and the Security Documents to which it is a party; all necessary corporate, shareholder (if appropriate) and other action has been taken to authorise the execution, delivery and on the execution of the Security Documents performance of the same and no limitation on the powers of the Borrower to borrow or any other Security Party to  howsoever incur liability and/or to provide or grant security will be exceeded as a result of borrowing any part of the Loan;

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	7.1.3	Binding obligations

            

the Underlying Documents and the Security Documents, when executed, will constitute valid and legally binding obligations of the relevant Security Parties enforceable in accordance with their respective terms and admissible in evidence and the Security Documents (other than the Corporate Guarantee) will create first priority Encumbrances;

	7.1.4	No conflict with other obligations

the execution and delivery of, the performance of their obligations under, and compliance with the provisions of, the Underlying Documents and the Security Documents by the relevant Security Parties will not (i) contravene any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which any Security Party is subject, (ii) conflict with, or result in any breach of any of the terms of, or constitute a default under, any agreement or other instrument to which any Security Party is a party or is subject or by which it or any of its property is bound, (iii) contravene or conflict with any provision of the constitutional documents of any Security Party  or (iv) result in the creation or imposition of, or oblige any of the Security Parties to create, any Encumbrance (other than a Permitted Encumbrance) on any of the undertakings, assets, rights or revenues of any of the Security Parties;

	7.1.5	No default

no Default has occurred;

	7.1.6	No litigation or judgments

no Proceedings are current, pending or, to the knowledge of the officers of the Borrower, threatened against any of the Security Parties or their assets which could have a Material Adverse Effect and there exist no judgments, orders, injunctions which would materially affect the ability of the Security Parties to perform their obligations under the Security Documents to which they are a party;

	7.1.7	No filings required

except for the registration of the Mortgage in the relevant register under the laws of the Flag State through the Registry, it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of any of the Underlying Documents or any of the Security Documents that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Pertinent Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Pertinent Jurisdiction on or in relation to any of the Underlying Documents or the Security Documents and each of the Underlying Documents and the Security Documents is in proper form for its enforcement in the courts of each Pertinent Jurisdiction;

	7.1.8	Required Authorisations and legal compliance

all Required Authorisations have been obtained or effected and are in full force and effect and no Security Party has in any way contravened any applicable law, statute, rule or regulation to which any Security Party is subject;

	7.1.9	Choice of law

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the choice of English law to govern the Underlying Documents and the Security Documents (other than the Mortgage and the Accounts Pledge), the choice of the law of the Flag State to govern the Mortgage, the choice of German law to govern the Accounts Pledge, the submissions by the Security Parties to the jurisdiction of the English courts and the obligations of such Security Parties associated therewith, are valid and binding;

 

	7.1.10	No immunity

no Security Party nor any of their assets is entitled to immunity on the grounds of sovereignty or otherwise from any Proceedings whatsoever;

	7.1.11	Financial statements correct and complete

the latest audited and unaudited consolidated financial statements of the Corporate Guarantor in respect of the relevant financial year or quarter as delivered to the Agent present or will present fairly and accurately the consolidated financial position of the Corporate Guarantor as at the date thereof and the combined results of the operations of the Corporate Guarantor for the financial year ended on such date and, as at such date, neither the Borrower, nor the Corporate Guarantor nor any of its subsidiaries had any significant liabilities (contingent or otherwise) or any unrealised or anticipated losses which are not disclosed by, or reserved against or provided for in, such financial statements;

	7.1.12	Pari passu

the obligations of the Borrower under this Agreement and the Master Agreement are direct, general and unconditional obligations of the Borrower and rank pari passu with all other present and future unsecured and unsubordinated Indebtedness of the Borrower except for obligations which are mandatorily preferred by operation of law and not by contract;

	7.1.13	Information/ Material Adverse Effect

all information, whatsoever provided by any Security Party to the Agent in connection with the negotiation and preparation of the Security Documents or otherwise provided hereafter in relation to, or pursuant to, this Agreement is, or will be, true and accurate in all material respects and not misleading, does or will not omit material facts and all reasonable enquiries have been, or shall have been, made to verify the facts and statements contained therein and there has not occurred any event which could have a Material Adverse Effect on any Security Party since such information was provided to the Agent; there are, or will be, no other facts the omission of which would make any fact or statement therein misleading;

	7.1.14	No withholding Taxes

no Taxes anywhere are imposed whatsoever by withholding or otherwise on any payment to be made by any Security Party under the Underlying Documents or the Security Documents to which such Security Party is or is to be a party or are imposed on or by virtue of the execution or delivery by the Security Parties of the Underlying Documents or the Security Documents or any other document or instrument to be executed or delivered under any of the Security Documents;

	7.1.15	Use of proceeds

the Borrower shall apply the Loan only for the purposes specified in clauses 1.1 and 2.1;

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7.1.16            The Vessel

 

throughout the Facility Period (following the Delivery Date), the Vessel (and in relation to (a), her Earnings and Insurances in accordance with the requirements of, the Ship Security Documents) will, except as the Agent may otherwise permit in writing, be :

		(a)	in the absolute sole, legal and beneficial ownership of the Borrower;

		(b)	registered through the offices of the relevant Registry as a ship under the laws and flag of the relevant Flag State;

		(c)	in compliance with the ISM Code and the ISPS Code and operationally seaworthy and in every way fit for service;

		(d)	classed with the relevant Classification free of any recommendations, qualifications or conditions of the Classification Society which have not been complied with in accordance with their terms;

		(e)	insured in accordance with the Ship Security Documents; and

		(f)	managed by the Managers in accordance with the terms of the Management Agreements;

	7.1.17	Vessel’s employment

except with the prior written consent of the Lenders (such consent not to be unreasonably withheld or delayed), there will not be any agreement or arrangement whereby the Earnings of the Vessel may be shared or pooled howsoever with any other person, except for customary profit sharing provisions usually included in arm’s length charterparties at the time the Vessel is fixed;

	7.1.18	Freedom from Encumbrances

neither the Vessel nor its Earnings, Insurances or Requisition Compensation nor the Earnings Account nor the Retention Account nor the Drydock Reserve Account nor any Extended Employment Contract in respect of the Vessel nor any other properties or rights which are, or are to be, the subject of any of the Security Documents nor any part thereof will be subject to any Encumbrance except Permitted Encumbrances;

	7.1.19	Environmental Matters

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

		(a)	the Borrower, the Corporate Guarantor, the Managers and the other Security Parties and, to the best of the Borrower’s knowledge and belief (having made due enquiry), their respective Environmental Affiliates, have complied with the provisions of all Environmental Laws;

		(b)	the Borrower, the Corporate Guarantor, the Managers and the other Security Parties and, to the best of the Borrower’s knowledge and belief (having made due enquiry), their respective Environmental Affiliates have obtained all Environmental Approvals and are in compliance with all such Environmental Approvals;

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		(c)	no Environmental Claim has been made or threatened or pending against the Borrower, the Corporate Guarantor, any Managers or any other Security Party, or, to the best of the Borrower’s knowledge and belief (having made due enquiry), any of their respective Environmental Affiliates; and

		(d)	there has been no Environmental Incident;

	7.1.20	ISM and ISPS Code

the Borrower will comply with and continue to comply with and procure that the Technical Manager complies with and continues to comply with the ISM Code, the ISPS Code and all other statutory and other requirements relative to its business and in particular the Borrower or the Technical Manager will obtain and maintain a valid DOC and SMC for the Vessel and that it and the Technical Manager will implement and continue to implement an ISM SMS;

	7.1.21	Copies true and complete

the Certified Copies of the constitutional documents of the Security Parties and the Certified Copies or originals of the Underlying Documents delivered or to be delivered to the Agent pursuant to clause 9.1 are, or will when delivered be, true and complete copies or, as the case may be, originals of such documents; and such documents constitute valid and binding obligations of the parties thereto enforceable in accordance with their respective terms and there have been no amendments or variations thereof or defaults thereunder;

	7.1.22	the Borrower is the ultimate beneficiary of the Loan;

	7.1.23	the Borrower has not incurred any Indebtedness save under this Agreement or as otherwise disclosed to the Agent in writing;

	7.1.24	the Corporate Guarantor and the Borrower have filed all tax and other fiscal returns required to be filed by any tax authority to which they are subject;

	7.1.25	the Borrower does not have an office in England;

	7.1.26	Prohibited Persons, unlawful activity

		(a)	to the best of its knowledge, none of the shares in the Borrower nor in the Vessel are or will be at any time during the Facility Period legally owned and controlled by a Prohibited Person;

		(b)	to the best of its knowledge, no Prohibited Person has or will have at any time during the Facility Period any legal or beneficial interest of any nature whatsoever in any of the shares of any of the Security Parties (other than in relation to the Corporate Guarantor); and

		(c)	to the best of its knowledge, no title in any property or other assets subject to an Encumbrance created by a Security Document has been obtained in breach of any existing applicable law, statute, rule or regulation to which any Security Party is subject;

	7.1.27	Insolvency

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The Borrower is not unable or has not admitted inability to pay its debts as they fall due, has suspended making payments on any of its debts or has announced an intention to do so, is or has become insolvent; or has negative net worth (taking into account contingent liabilities), or has suffered the declaration of a moratorium in respect of any of its Indebtedness;

 

	7.1.28	No business

the Borrower has not undertaken any business or employed any person or incurred any obligations in respect of any pension scheme, save in respect of the Master, officers and crew of the Vessel;

	7.1.29	Ownership of Borrower

all the shares in the Borrower are legally owned and controlled by the Corporate Guarantor and are not held on trust for any third party;

	7.1.30	Accounting reference date

the Borrower’s and the Corporate Guarantor’s accounting reference date is 31 December;

	7.1.31	Manager

each Manager is fit and proper commercial or technical (as the case may be) manager of the Vessel with the sufficient and fully trained personnel, experience and ability to perform its obligations in accordance with all applicable laws and regulations and in accordance with first class international ship management practice; and

	7.1.32	Anti-bribery

to the best of its knowledge and belief, none of the improper or illegal acts referred to in Clause 8.1.33 have occurred prior to the date of execution of this Loan Agreement.

	7.2	Repetition of representations and warranties

On each day throughout the Facility Period, the Borrower shall be deemed to repeat the representations and warranties in clause 7 updated mutatis mutandis as if made with reference to the facts and circumstances existing on such day.

	8	UNDERTAKINGS

	8.1	General

The Borrower undertakes with each Bank that, from the Execution Date until the end of the Facility Period, it will:

	8.1.1	Notice of Default and Proceedings

promptly inform the Agent of (a) any Default and of any other circumstances or occurrence which might adversely affect the ability of any Security Party to perform its obligations on time under any of the Security Documents and (b) as soon as the same is instituted or threatened, details of any Proceedings involving any Security Party which could have a Material Adverse Effect on that Security Party and/or the operation of the Vessel (including, but not limited to any Total Loss of the Vessel or the occurrence of any Environmental Incident) and will from

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time to time, if so requested by the Agent, confirm to the Agent in writing that, save as otherwise stated in such confirmation, no Default has occurred and is continuing and no such Proceedings have been instituted or are threatened;

 

	8.1.2	Authorisation

obtain or cause to be obtained, maintain in full force and effect and comply fully with all Required Authorisations, provide the Agent with Certified Copies of the same upon request and do, or cause to be done, all other acts and things which may from time to time be necessary or desirable under any applicable law (whether or not in the Pertinent Jurisdiction) for the continued due performance of all the obligations of the Security Parties under each of the Security Documents;

	8.1.3	Corporate Existence

ensure that each Security Party maintains its corporate existence as a body corporate duly organised and validly existing and in good standing under the laws of the Pertinent Jurisdiction;

	8.1.4	Use of proceeds

use the Loan exclusively for the purposes specified in clauses 1.1 and 2.1;

	8.1.5	Pari passu

ensure that its obligations under this Agreement and the Master Agreement shall at all times rank at least pari passu with all their other present and future unsecured and unsubordinated Indebtedness with the exception of any obligations which are mandatorily preferred by law and not by contract;

	8.1.6	Financial statements

send to the Agent (or procure that is sent):

		(a)	as soon as possible, but in no event later than 180 days after the end of each of its financial years, annual audited (prepared in accordance with US GAAP by a first class international firm of accountants) consolidated financial statements of the Corporate Guarantor (commencing with the financial year ending 31 December 2014), together with updated details (in a form acceptable to the Agent) of all off-balance sheet and time-charter hire commitments of the Vessel;

		(b)	as soon as possible, but in no event later than 120 days after the end of each 3 month period in each of its financial years, the unaudited consolidated financial statements of the Corporate Guarantor for that 3 month period;

	8.1.7	Compliance Certificates

deliver to the Agent on the date on which the audited consolidated accounts are delivered under clause 8.1.6(a) a Compliance Certificate together with such supporting information as the Agent may reasonably require;

	8.1.8	Financial Covenants

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procure that

 

		(a)	the Net Worth of the Group will at all times exceed USD30,000,000;

		(b)	the Group maintains a market capitalisation of no less than USD15,000,000;

		(c)	the Total Liabilities divided by the Total Assets shall at all times be less than 75%; and

		(d)	the balance standing to the credit of the Earnings Account shall at no time fall below USD300,000;

	8.1.9	Reimbursement of MII & MAP Policy premiums

reimburse each Bank on the Agent’s written demand the amount of the premium payable by such Bank for the inception or, as the case may be, extension and/or continuance of the MII & MAP Policy (against presentation of appropriate vouchers or invoices);

	8.1.10	Provision of further information

provide the Agent, and procure that the Corporate Guarantor and the Managers shall provide the Agent, with such financial or other information concerning the Vessel, the Borrower, the Corporate Guarantor and their respective affairs and activities including, but not limited to, financial standing, Indebtedness, balance sheet, repayment schedules, operating expenses, charter arrangements, time-charter hire commitments and operations as the Agent or any Lender (acting through the Agent) may from time to time reasonably require and all other documentation and information as any Lender may from time to time require in order to comply with its, and all other relevant, know-your-customer  regulations or to be able to create its own financial model in respect of the Borrower and/or the Corporate Guarantor;

	8.1.11	Obligations under Security Documents

duly and punctually perform each of the obligations expressed to be imposed or assumed by it under the Security Documents and the Underlying Documents and will procure that each of the other Security Parties will, duly and punctually perform each of the obligations expressed to be assumed by it under the Security Documents and the Underlying Documents to which it is a party;

	8.1.12	Compliance with ISM Code

comply with, and will procure that any Operator will comply with, and ensure that the Vessel and any Operator comply with the requirements of the ISM Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the Security Period (as defined in the Deeds of Covenant);

	8.1.13	Withdrawal of DOC and SMC

immediately inform the Agent if there is any actual withdrawal of their or any Operator’s DOC or the SMC of the Vessel;

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	8.1.14	Issuance of DOC and SMC

 

and will procure that any Operator will promptly inform the Agent of the receipt by the Borrower or any Operator of notification that its application for a DOC or any application for an SMC for the Vessel has been refused;

	8.1.15	ISPS Code Compliance

and will procure that the Technical Manager or any Operator will:

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

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

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

	8.1.16	Compliance with Laws and payment of taxes

comply with, and will ensure that the Corporate Guarantor, the Managers and the Vessel comply with, all relevant Environmental Laws, laws, statutes, directives, regulations, decrees, rulings and analogous rules (including, but not limited to, laws relating to any trading prohibition imposed by the Flag State, the country of incorporation of the Borrower and the Corporate Guarantor or the country of nationality of any crew member of the Vessel by which the Borrower is bound or any rules relating to international sanctions as set out in clause 8.1.22 or otherwise) and have at all times all trading certificates necessary to carry out the trade in which the Vessel is engaged at any relevant time and pay all taxes for which it, the Corporate Guarantor and each Manager is liable as they fall due;

	8.1.17	Charters etc.

(i) deliver to the Agent a Certified Copy of the Required Charter and each Extended Employment Contract upon its execution, (ii) forthwith on the Agent’s request execute (a) a Charter Assignment in respect thereof and (b) any notice of assignment required in connection therewith and shall provide to the Agent evidence of service of such notice to the relevant charterer and use best efforts to procure the acknowledgement of any such notice of assignment by the relevant charterer and (c) (if the Extended Employment Contract is a bareboat charter) procure execution by the Borrower and the charterer of a Tripartite Deed, together with all notices required to be determined thereunder and (iii) pay all legal and other costs incurred by the Agent in connection with any such Charter Assignment and Tripartite Deed, forthwith following the Agent’s demand;

	8.1.18	Inspection

permit the Agent, upon receipt of at least 15 days written notice, by surveyors or other persons appointed by it for such purpose, to board the Vessel at all reasonable times (which the Agent shall use reasonable endeavours to ensure do not adversely affect the trading and operation of the Vessel) for the purpose of inspecting her and to afford all proper facilities for such inspections and for this purpose to give the Agent reasonable advance notice of any intended drydocking of the Vessel (whether for the purpose of classification, survey or otherwise) and the Borrower shall pay the costs in respect of (i) one inspection in each calendar year and (ii) all such inspections following the occurrence of an Event of Default which has not been remedied or waived;

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	8.1.19	Subordination

 

ensure that all Indebtedness of the Borrower to any Security Party is fully subordinated to the rights of the Banks under the Security Documents, all in a form acceptable to the Agent (acting on the instructions of the Majority Lenders);

	8.1.20	Classification Society undertaking

if so requested by the Agent, on or before the Delivery Date, or immediately on any change of Classification Society for the Vessel, irrevocably instruct (in such form as the Agent and the Majority Lenders may require in their sole discretion) the Classification Society of the Vessel to do all or any of the following during the Facility Period (and use reasonable endeavours to procure that the Classification Society undertakes with the Agent at such time):

		(a)	to send to the Agent, following receipt of a written request from the Agent, certified true copies of all original class records held by the Classification Society in relation to the Vessel;

		(b)	to allow the Agent (or its agents),  at any time and from time to time, to inspect the original class and related records of the Borrower and the Vessel at the offices of the Classification Society and to take copies of them;

		(c)	to notify the Agent immediately if the Classification Society:

		(i)	receives notification from the Borrower or the Manager that the Vessel’s Classification Society is to be changed;

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

		(iii)	has imposed any requirements or recommendations in respect of the Vessel which are not complied with in accordance with their terms;

		(d)	following receipt of a written request from the Agent:

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

		(ii)	if the Borrower is in default of any of its contractual obligations or liabilities to the classification society, to specify to the Agent in reasonable detail the facts and circumstances of such default, the consequences thereof, and any remedy period agreed or allowed by the classification society;

	8.1.21	Insurance opinion

provide the Agent on request, at the Borrower’s cost, with an opinion from insurance consultants on the Insurances effected or to be effected in respect of the Vessel, confirming that the Vessel is insured in accordance with the terms of the Agreement and the Ship Security Documents or, if such insurance opinion has been obtained by the Agent, shall reimburse the

37

Agent for the cost of such opinion PROVIDED THAT the Borrower shall bear the cost of such insurance opinion (i) no more than once per calendar year prior to the occurrence of an Event of Default which is continuing and (ii) at all times after the occurrence of an Event of Default which is continuing.

 

	8.1.22	Sanctions

	(1)	ensure that the Vessel will not be employed, and will not suffer the Vessel to be employed, and will not and will ensure that no Group Member does, conduct or undertake any business:

		(a)	in breach of any sanctions, embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment, exporting, financing or making assets available (or other activities similar to or connected with any of the foregoing) (“Sanction Program”):

		(i)	imposed by any law or regulation of the United Kingdom, the Council of the European Union, the United Nations or its Security Council or the United States of America; or

		(ii)	otherwise imposed by any law or regulation,

in each case as these may apply to any Security Party; or

		(b)	in any trade, carriage of goods or business which is forbidden by any Sanctions Program or the laws of the United Kingdom or the United States of America as they apply to any Security Party, or any law applicable to the Borrower, the Corporate Guarantor, any Operator of the Vessel or any country which the Vessel may visit; or

		(c)	in carrying illicit or prohibited goods; or

		(d)	in a way which may make it liable to be condemned by a prize court or destroyed, seized or confiscated; or

(e)        by or for the benefit of a Prohibited Person;

	(2)	ensure that if the Borrower finds out (i) that the Vessel has been chartered, leased or otherwise provided directly or indirectly to any Prohibited Person or (ii) that it has entered into an agreement to sell, but has not yet delivered, the Vessel to a Prohibited Person, it shall (a) terminate as soon as possible (and at the latest within 30 days of such discovery) the relationship with the Prohibited Person and (b) inform the Agent immediately;

	(3)	provide to the Agent upon its written request all documentation related to the Vessel, and goods transported at any time by it:

(i)        to prove that no Security Party is in breach of any Sanction Program; and

		(ii)	which a Security Party is required to disclose to any regulatory authority pursuant to a Sanction Program;

provided that:

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		(i)	the Borrower shall be obliged only to ensure that the provisions of this clause apply to each Group Member only to the extent that that Group Member is bound by the relevant law or regulation in respect of the matters set out in this clause; and

 

		(ii)	if (aa) a Bank is resident in Germany (“Inländer”) within the meaning of Section 2 Paragraph 15 of the German foreign trade and payments act (Außenwirtschaftsgesetz  and herein, “AWG”) and is (bb) therefore subject to Section 7 of the German foreign trade ordinance (Außenwirtschaftsverordnung and herein, “AWV”) and would (cc) therefore not itself be permitted to give a representation or an undertaking that is given or is to be given by a Security Party with respect to sanctions under this Agreement or any other Security Document, then such Bank shall not, in the event of a breach by a Security Party of any such representation or undertaking, be entitled to invoke or declare an Event of Default or vote for a cancellation of the Total Commitments and/or repayment of the Loan in accordance with Clause 10.2 (Acceleration).

The undertakings in clauses 8.1.14 and 8.1.22 and the representations in clause 7.1.26 (a) and (b) shall not apply for the benefit of any Bank which is resident in Germany (“Inländer”) within the meaning of Section 2 Para. 15 of the AWG to the extent that the enforcement of such provision by that Bank would (a) violate, conflict with or incur liability under EU Regulation (EC) 2271/96 or (b) violate or conflict with section 7 of the AWV in connection with section 4 paragraph (1)(a)(3) of the AWG or any similar anti-boycott statute in force in the Federal Republic of Germany.

	8.1.23	Delivery of reports

deliver to the Agent, and procure that the Corporate Guarantor shall deliver to the Agent, concurrently with the issue thereof as many Certified Copies as the Agent may require of every report, circular, notice or like document issued by any Security Party to its creditors generally;

	8.1.24	Vessel information

provide the Agent, and shall procure that the Corporate Guarantor shall provide the Agent, promptly on request with all such information as it may from time to time reasonably require in relation to the Vessel, her Insurances (in accordance with the requirements of, the Ship Security Documents), her employment, position and engagements, particulars of all towages and salvages, and copies of all charters and other contracts for her employment, or otherwise howsoever concerning her, as well as copies of all original class records held by the Classification Society in relation to the Vessel, all reports of port state control inspections of the Vessel and information on the financial and operating performance of the Vessel in such form as the Agent may approve or require and all such information as it may from time to time require to determine the Valuation Amount of the Vessel in accordance with clause 8.2.2;

	8.1.25	Insolvency

procure that neither the Corporate Guarantor nor any material creditor of the Borrower presents a petition (unless contested in good faith by appropriate proceedings), gives notice or takes any other step which could result in the Borrower being declared insolvent or being dissolved or in the appointment of an administrator of the Borrower or have an effect equivalent or similar thereto;

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	8.1.26	Transactions with associated companies

 

not enter into any transactions with the Corporate Guarantor or any other Security Party, other than on arm’s length terms, and the Borrower shall not become liable for any third party obligations or encumber its rights under this Agreement;

	8.1.27	Technical reports

deliver to the Agent, and shall procure that the Technical Manager shall deliver to the Agent, on request copies of the latest complete technical reports in respect of the Vessel;

	8.1.28	The Vessel

ensure that throughout the Facility Period (following the Delivery Date), the Vessel (and in relation to (a), her Earnings and Insurances in accordance with the requirements of, the Ship Security Documents) will, except as the Agent may otherwise permit in writing, be:

		(a)	in the absolute sole and legal beneficial ownership of the Borrower and not held on trust for any third party;

		(b)	registered through the offices of the Registry as a ship under the laws and flag of the Flag State;

		(c)	in compliance with the ISM Code and the ISPS Code and operationally seaworthy and in every way fit for service;

		(d)	classed with the Classification free of any recommendations, qualifications or conditions of the Classification Society which have not been complied with in accordance with their terms;

		(e)	insured in accordance with the Ship Security Documents; and

		(f)	managed by the Managers in accordance with the terms of the Management Agreements;

	8.1.29	Derivatives

If at any time the Borrower wishes to enter into any derivative transaction of the type envisaged by the Master Agreement in relation to the Loan, it shall not enter into any such transaction with any person other than the Swap Bank unless it has first requested the Swap Bank to quote for such business; and

	8.1.30	Anti-bribery

The Borrower shall ensure that no Security Party nor any of its respective affiliates, officers, directors, employees or agents acting on its behalf will offer, give, insist on, receive or solicit any illegal payment or improper advantage to influence the action of any person in connection with any of its business.

	8.2	Security value maintenance

	8.2.1	Security shortfall

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If, at any time after the Drawdown Date, the Security Value shall be less than the Required Security Amount, the Agent (acting on the instructions of the Majority Lenders) shall give written notice to the Borrower requiring that such deficiency be remedied and then the Borrower must either:

 

		(a)	prepay within a period of thirty (30) days of the date of receipt by the Borrower of the Agent’s said notice such part of the Loan as will result in the Security Value after such prepayment (taking into account any other repayment of the Loan made between the date of the notice and the date of such prepayment) being equal to or higher than the Required Security Amount; or

		(b)	within thirty (30) days of the date of receipt by the Borrower of the Agent’s said notice constitute to the satisfaction of the Agent such further security for the Loan as shall be acceptable to the Lenders in their discretion having a value for security purposes (as determined in accordance with Clause 8.2.5) at the date upon which such further security shall be constituted which, when added to the Security Value, shall not be less than the Required Security Amount as at such date.

The provisions of clauses 4.5 (other than clause 4.5.3) and 4.6 shall apply to prepayments under clause 8.2.1(a) provided that the Agent shall apply such prepayments pro rata against the Advances in reduction of all the repayment instalments (including the Balloon Instalment) under clause 4.1 (a) in the case of Advance A, in inverse order of maturity, starting with the Balloon Instalment and (b) in the case of Advance B, pro rata and the amounts of the Loan prepaid hereunder shall not be available to be re-borrowed.

	8.2.2	Valuation of the Vessel

The Vessel shall, for the purposes of this Agreement, be valued in USD by taking either (i) the valuation prepared by an Approved Broker nominated and appointed by the Agent or (ii) if requested by the Borrower, the arithmetic mean of valuations prepared by the Approved Broker so nominated and appointed by the Agent and an Approved Broker nominated by the Borrower and appointed by the Agent (at the Borrower’s expense), in each case such valuations to be made without physical inspection, and on the basis of a sale for prompt delivery for cash at arms’ length, on normal commercial terms, as between a willing buyer and a willing seller without taking into account the benefit or burden of any charterparty or other engagement concerning the Vessel.  Valuations shall be obtained:

		(a)	on the date falling one year after the Drawdown Date and annually thereafter, at the Borrower’s expense; and

		(b)	(in addition to (a) above) at any other time as the Agent (acting on the instructions of the Majority Lenders shall additionally require (in its absolute discretion) at (save as provided in Clause 8.2.4) the cost of the Lenders.

The Approved Brokers’ valuations for the Vessel on each such occasion shall constitute the Valuation Amount of the Vessel for the purposes of this Agreement until superseded by the next such valuation.

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	8.2.3	Information

 

The Borrower undertakes with the Banks to supply to the Agent and to the Approved Broker such information concerning the Vessel and its condition as such shipbrokers may reasonably require for the purpose of determining any Valuation Amount.

	8.2.4	Costs

All costs in connection with obtaining and determining (i) any Valuation Amount pursuant to Clause 8.2.2(a), (ii) any Valuation Amount pursuant to clause 8.2.2(b) after the occurrence of a Default and (iii) any valuation either of any additional security for the purposes of ascertaining the Security Value at any time or necessitated by the Borrower electing to constitute additional security pursuant to clause 8.2.1(b), must be paid by the Borrower and all other costs in connection with obtaining and determining any Valuation Amount shall be at the cost of the Lenders.

	8.2.5	Valuation of additional security

For the purposes of this clause 8.2, the market value (i) of any additional security over a ship (other than the Vessel) shall be determined in accordance with clause 8.2.2 and (ii) of any other additional security provided or to be provided to the Banks or any of them shall be determined by the Agent in its absolute discretion, Provided that additional security in the form of cash in Dollars will be valued on a Dollar for Dollar basis.

	8.2.6	Documents and evidence

In connection with any additional security provided in accordance with this clause 8.2, the Agent shall be entitled to receive (at the Borrower’s expense) such evidence and documents of the kind referred to in Schedule 3 as may in the Agent’s opinion be appropriate and such favourable legal opinions as the Agent shall in its absolute discretion require.

	8.3	Negative undertakings

The Borrower undertakes with each Bank that, from the Execution Date until the end of the Facility Period, it will not, without the prior written consent of the Agent (acting on the instructions of the Lenders and such consent in respect of any change of name, flag, Classification, Classification Society or Manager not to be unreasonably withheld):

	8.3.1	Negative pledge

permit any Encumbrance (other than a Permitted Encumbrance or as otherwise disclosed in writing by the Borrower to the Agent (and approved by the Agent) on or prior to the date of this Agreement) to subsist, arise or be created or extended over all or any part of its present or future undertakings, assets, rights or revenues to secure or prefer any present or future Indebtedness or other liability or obligation of any Security Party or any other person;

	8.3.2	No merger or transfer

merge or consolidate with any other person or permit any change to the legal or beneficial ownership of its shares from that existing at the Execution Date (and for the avoidance of doubt any change in the ownership of shares of and in the Corporate Guarantor occurring in the normal course of business shall not constitute a breach of this Clause);

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	8.3.3	Disposals

 

sell, transfer, assign, create security or option over, pledge, pool, abandon, lend or otherwise dispose of or cease to exercise direct control over its present or future undertakings, assets, rights or revenues (otherwise than by transfers, sales or disposals for full consideration in the ordinary course of trading) whether by one or a series of transactions related or not;

	8.3.4	Other business or manager

undertake any type of business other than the ownership and operation of the Vessel or (without the prior written consent of the Agent) employ anyone other than the Managers as commercial and technical manager of the Vessel or agree to any material amendment to or variation of the terms of the Management Agreements;

	8.3.5	Acquisitions or investments

acquire any further assets other than the Vessel and rights arising under contracts entered into by or on behalf of the Borrower in the ordinary course of their businesses of acquiring, owning, operating and chartering the Vessel, or make any financial investments (other than derivative transactions pursuant to the Master Agreement);

	8.3.6	Other obligations

incur any obligations (to any Security Party or otherwise) except for obligations arising under the Underlying Documents or the Security Documents or contracts entered into in the ordinary course of their business of acquiring, owning, operating and chartering the Vessel on arms’ length terms;

	8.3.7	No borrowing

incur any Borrowed Money except for Borrowed Money pursuant to the Security Documents;

	8.3.8	Repayment of borrowings

repay or prepay the principal of, or pay interest on or any other sum in connection with any of their Borrowed Money except for Borrowed Money pursuant to the Security Documents;

	8.3.9	Guarantees

issue any guarantees or otherwise become directly or contingently liable, or give security or quasi security for the obligations of any person, firm, or corporation except pursuant to the Security Documents and except for guarantees from time to time required in the ordinary course by any protection and indemnity or war risks association with which the Vessel is entered, guarantees required to procure the release of the Vessel from any arrest, detention, attachment or levy or guarantees required for the salvage of the Vessel;

	8.3.10	Loans

make any loans or grant any credit (save for normal trade credit in the ordinary course of business) to any person or agree to do so;

	8.3.11	Dividends

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declare or pay any dividends;

 

	8.3.12	Sureties

permit any Indebtedness of the Borrower to any person (other than the Banks pursuant to the Security Documents) to be guaranteed by any person (except for guarantees from time to time required in the ordinary course of business and in the ordinary course by any protection and indemnity or war risks association with which the Vessel is entered, guarantees required to procure the release of the Vessel from any arrest, detention, attachment or levy or guarantees or undertakings required for the salvage of the Vessel);

	8.3.13	Subsidiaries

form or acquire any Subsidiaries;

	8.3.14	Change of name, flag or class

change the name, flag, Classification or Classification Society of the Vessel;

	8.3.15	Extended Employment Contract/Management Agreement

		(a)	amend in any material respect, vary or terminate a Management Agreement, any Extended Employment Contract or the Required Charter;

		(b)	without the prior written consent of the Agent (acting on the instructions of the Lenders) and then, if such consent is given, only subject to such conditions as the Agent (acting on the instructions of the Lenders) may impose, let or agree to let the Vessel:

		(i)	on demise charter for any period; or

		(ii)	by any time or consecutive voyage charter for a term which exceeds or which by virtue of any optional extensions therein contained may exceed twelve (12) months’ duration; or

		(iii)	on terms whereby more than two (2) months’ hire (or the equivalent) is payable in advance; or

		(iv)	otherwise than on bona fide arm’s length terms;

	8.3.16	Nuclear waste

permit the Vessel to carry nuclear waste or radioactive material.

	8.3.17	Prohibited Persons

procure that no Security Party will, to the best of its knowledge, have any course of dealings, directly or indirectly, with any Prohibited Person;

	8.3.18	Change in constitutional documents

amend or vary its constitutional documents in any material respect;

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	8.3.19	Employees

 

employ any person except the Master, officers and crew of the Vessel;

	8.3.20	MOA/Required  Charter

agree to amend or vary the terms of the MOA or the Required Charter in any material respect without the prior written consent of the Agent (acting on the instructions of the Lenders and such consent not to be unreasonably withheld or delayed) and then, if such consent is given, only subject to such conditions as the Agent (acting on the instructions of the Lenders) may impose.

	9	CONDITIONS

	9.1	Advance of the Loan

The obligation of each Lender to make its Commitment available in respect of the Loan is conditional upon:

	9.1.1	that, on or before the service of the Drawdown Notice, the Agent has received the documents described in Part A of Schedule 3 in form and substance satisfactory to the Agent and its lawyers;

	9.1.2	that, on or before the Drawdown Date, the Agent has received the documents described in Part B of Schedule 3 in form and substance satisfactory to the Agent and its lawyers;

	9.1.3	that, on or before the Release Date but prior to or concurrently with paying the Loan to the Seller or, at the Borrower’s request, to the Builder, the Agent has received the documents described in Part C of Schedule 3 in form and substance satisfactory to the Agent and its lawyers;

	9.1.4	the representations and warranties contained in clause 7 and clauses 4.1 and 4.2 of the Corporate Guarantee being then true and correct as if each was made with respect to the facts and circumstances existing at such time; and

	9.1.5	no Default having occurred and there being no Default which would result from the making of the Loan.

	9.2	Waiver of conditions precedent

The conditions specified in this clause 9 are inserted solely for the benefit of the Lenders and may be waived by the Agent in whole or in part and with or without conditions only with the consent of the Majority Lenders.

	9.3	Further conditions precedent

Not later than five (5) Banking Days prior to the Drawdown Date, the Agent (acting on the instructions of the Majority Lenders) may request and the Borrower must, not later than two (2) Banking Days prior to such date, deliver to the Agent (at the Borrower’s expense) on such request further favourable certificates and/or opinions as to any or all of the matters which are the subject of clauses 7, 8, 9 and 10.

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	10	EVENTS OF DEFAULT

 

	10.1	Events

Each of the following events shall constitute an Event of Default (whether such event shall occur voluntarily or involuntarily or by operation of law or regulation or in connection with any judgment, decree or order of any court or other authority or otherwise, howsoever):

	10.1.1	Non-payment: any Security Party fails to pay any sum payable by it under any of the Security Documents to which it is a party at the time, in the currency and in the manner stipulated in the Security Documents or the Underlying Documents (and so that, for this purpose, sums payable (i) under clauses 3.1 and 4.1 shall be treated as having been paid at the stipulated time if (aa) received by the Agent within two (2) Banking Days of the dates therein referred to and (bb) such delay in receipt is caused by administrative or other delays or errors within the banking system and (ii) on demand shall be treated as having been paid at the stipulated time if paid within five (5) Banking Days of demand); or

	10.1.2	Breach of Insurance and certain other obligations: the Borrower or, as the context may require, the Technical Manager or any other person fails to obtain and/or maintain the Insurances (in accordance with the requirements of, the Ship Security Documents) for the Vessel or if any insurer in respect of such Insurances cancels the Insurances or disclaims liability by reason, in either case, of mis-statement in any proposal for the Insurances or for any other failure or default on the part of the Borrower or any other person or the Borrower commits any breach of or omits to observe any of the obligations or undertakings expressed to be assumed by them under clause 8; or

	10.1.3	Breach of other obligations: any Security Party commits any breach of or omits to observe any of its obligations or undertakings expressed to be assumed by it under any of the Security Documents (other than those referred to in clauses 10.1.1 and 10.1.2 above) unless such breach or omission, in the opinion of the Agent (following consultation with the Banks) is capable of remedy, in which case the same shall constitute an Event of Default if it has not been remedied to the satisfaction of the Agent within ten (10) days of the occurrence thereof; or

	10.1.4	Misrepresentation: any representation or warranty made or deemed to be made or repeated by or in respect of any Security Party in or pursuant to any of the Security Documents or in any notice, certificate or statement referred to in or delivered under any of the Security Documents is or proves to have been incorrect or misleading in any material respect; or

	10.1.5	Cross-default: There shall occur a default (howsoever therein described) under any Indebtedness of the Borrower or under any Indebtedness of the Corporate Guarantor exceeding USD1,000,000 or any Indebtedness of the Borrower or any Indebtedness of the Corporate Guarantor exceeding USD1,000,000 is not paid when due (subject to applicable grace periods) or any Indebtedness of the Borrower or any Indebtedness of the Corporate Guarantor exceeding USD1,000,000 becomes (whether by declaration or automatically in accordance with the relevant agreement or instrument constituting the same) due and payable prior to the date when it would otherwise have become due (unless as a result of the exercise by the Borrower or the Corporate Guarantor of a voluntary right of prepayment), or any creditor of the Borrower or the Corporate Guarantor becomes entitled to declare any such Indebtedness due and payable by reason of any default (however described) of the person concerned and such Indebtedness of the Borrower or the Corporate Guarantor (as the case may be) is not paid within fourteen (14) Banking Days from the due date for payment; or

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	10.1.6	Execution: any uninsured judgment or order made against any Security Party is not stayed, appealed against or complied with within thirty (30) days or a creditor attaches or takes possession of, or a distress, execution, sequestration or other process is levied or enforced upon or sued out against, any of the undertakings, assets, rights or revenues of any Security Party and is not discharged within thirty (30) days; or

 

	10.1.7	Insolvency: the Borrower is unable or admits inability to pay its debts as they fall due; suspends making payments on any of its debts or announces an intention to do so; becomes insolvent; or the Borrower has negative net worth (taking into account contingent liabilities); or suffers the declaration by any court, liquidator, receiver or administrator of a moratorium in respect of any of its Indebtedness; or

	10.1.8	Reduction or loss of capital: a meeting is convened by any Security Party (other than the Corporate Guarantor) without the Agent’s prior written consent, for the purpose of passing any resolution to purchase, reduce or redeem any of its share capital without the Agent’s prior written consent; or

	10.1.9	Dissolution: any corporate action, Proceedings or other steps are taken to dissolve or wind-up any Security Party or an order is made or resolution passed for the dissolution or winding up of any Security Party or a notice is issued convening a meeting for such purpose; or

	10.1.10	Administration: any petition is presented, notice given or other steps are taken anywhere to appoint an administrator of any Security Party or the Agent reasonably believes that any such petition or other step is imminent or an administration order is made in relation to any Security Party; or

	10.1.11	Appointment of receivers and managers: any administrative or other receiver is appointed anywhere of any Security Party or any part of its assets and/or undertaking or any other steps are taken to enforce any Encumbrance over all or any part of the assets of any Security Party; or

	10.1.12	Compositions: any corporate action, legal proceedings or other procedures or steps are taken, or negotiations commenced, by any Security Party or by any of its creditors (other than the Corporate Guarantor) or any legal proceedings are taken in respect of the Corporate Guarantor, with a view to the general readjustment or rescheduling of all or part of its Indebtedness or to proposing any kind of composition, compromise or arrangement involving such company and any of its creditors; or

	10.1.13	Analogous proceedings: there occurs, in relation to any Security Party, in any Pertinent Jurisdiction, any event which, in the opinion of the Agent, appears in that Pertinent Jurisdiction to correspond with, or have an effect equivalent or similar to, any of those mentioned in clauses 10.1.6 to 10.1.12 (inclusive) or any Security Party otherwise becomes subject, in any such Pertinent Jurisdiction, to any corporate action, legal proceedings or other procedures or steps under any law relating to insolvency, bankruptcy or liquidation; or

	10.1.14	Cessation of business: any Security Party suspends or ceases or threatens to suspend or cease to carry on its business without the prior written consent of the Agent; or

	10.1.15	Seizure: all or a material part of the undertaking, assets, rights or revenues of, or shares or other ownership interests in, any Security Party are seized, nationalised, expropriated or compulsorily acquired by or under the authority of any Government Entity; or

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	10.1.16	Invalidity: any of the Security Documents or the Required Charter 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 and the Required Charter shall at any time and for any reason be contested by any Security Party which is a party thereto, or if any such Security Party shall deny that it has any, or any further, liability thereunder (unless, in respect of the Required Charter, the Vessel shall have been delivered to a new charterer and on terms and in a form acceptable to the Lenders pursuant to an Extended Employment Contract within 30 days of such invalidity or other event set out in this clause); or

 

	10.1.17	Unlawfulness: any Unlawfulness occurs or it becomes impossible or unlawful at any time for any Security Party, to fulfil any of the covenants and obligations expressed to be assumed by it in any of the Security Documents or for a Bank to exercise the rights or any of them vested in it under any of the Security Documents or otherwise; or

	10.1.18	Repudiation: any Security Party repudiates any of the Security Documents or does or causes or permits to be done any act or thing evidencing an intention to repudiate any of the Security Documents; or

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

	10.1.20	Arrest: the Vessel is arrested, confiscated, seized, taken in execution, impounded, forfeited, detained in exercise or purported exercise of any possessory lien or other claim or otherwise taken from the possession of the Borrower and the Borrower shall fail to procure the release of the Vessel within a period of ten (10) days thereafter; or

	10.1.21	Registration: the registration of the Vessel under the laws and flag of the Flag State is cancelled or terminated without the prior written consent of the Majority Lenders; or

	10.1.22	Unrest: the Flag State of the Vessel or the country in which any Security Party is incorporated or domiciled becomes involved in hostilities or civil war or there is a seizure of power in the Flag State by unconstitutional means unless the Borrower shall have transferred its Vessel onto a new flag acceptable to the Banks within thirty (30) days (or such other period as the Agent may notify to the Borrower) following the Agent’s written request to the Borrower to effect such transfer; or

	10.1.23	Environmental Incidents: an Environmental Incident occurs which gives rise, or may give rise, to an Environmental Claim which could, in the opinion of the Agent be expected to have a Material Adverse Effect; or

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

	10.1.25	Material events: any other event occurs or circumstance arises which, in the opinion of the Agent (following consultation with the Banks), is likely materially and adversely to affect either (i) the ability of any Security Party to perform all or any of its obligations under or otherwise to

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comply with the terms of any of the Security Documents or (ii) the security created by any of the Security Documents; or

 

	10.1.26	Required Authorisations: any Required Authorisation is revoked or withheld or modified or is otherwise not granted or fails to remain in full force and effect or if any exchange control or other law or regulation shall exist which would make any transaction under the Security Documents or the continuation thereof, unlawful or would prevent the performance by any Security Party of any term of any of the Security Documents to which they are a party;

	10.1.27	Shareholdings: there is any change in the immediate and/or ultimate legal and/or beneficial ownership or control of any of the shares of the Borrower from that existing on the Execution Date (and for the avoidance of doubt any change in the ownership of shares of and in the Corporate Guarantor occurring in the normal course of business shall not constitute a breach of this Clause);

	10.1.28	Classification: the Classification of the Vessel is withdrawn by the Classification Society;

	10.1.29	Material adverse change: there occurs a material adverse change in:

		(a)	the financial condition or strength, business, assets or credit worthiness of the Borrower or the Corporate Guarantor by reference to the financial position or strength, business, assets or credit worthiness of such Security Party as described by any Security Party to the Agent in the negotiation of this Agreement; or

		(b)	in the conditions prevailing in the international money and capital markets; or

		(c)	in the financial, political or economic situation globally; or

		(d)	the financial prospects of the Borrower or the Corporate Guarantor

which, in the reasonable opinion of the Agent (following consultation with the Lenders) could prejudice the ability of the Borrower and of the Corporate Guarantor to fulfil their respective obligations under the Security Documents on time;

	10.1.30	Money Laundering: any Security Party is in breach of or fails to observe any law, requirement, measure or procedure implemented to combat “money laundering” as defined in Article 1 of the Directive (91/308 EEC) of the Council of the European Communities;

	10.1.31	Management Agreements: a Management Agreement is terminated, revoked, suspended, rescinded, transferred, novated or otherwise ceases to remain in full force and effect for any reason except with the consent of the Agent (such consent not to be unreasonably withheld);

	10.1.32	Charters: the Required Charter is terminated other than by mere effluxion of time (unless the Vessel shall have been delivered to a new charterer and on terms and in a form acceptable to the Lenders pursuant to an Extended Employment Contract within 30 days of such termination) or is amended in a material respect without the consent of the Agent; or

	10.1.33	Master Agreement:  (i) an Event of Default or Potential Event of Default (in each case as defined in the Master Agreement) has occurred and is continuing under the Master Agreement or (ii) an Early Termination Date (as defined in the Master Agreement) has occurred or been effectively designated under the Master Agreement or (iii) a person entitled to do so gives notice of an Early Termination Date (as defined in the Master Agreement) or (iv) the Master

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Agreement is terminated, cancelled, suspended, rescinded or revoked or otherwise ceases to remain in full force and effect for any reason.

 

	10.2	Acceleration

The Agent may, and if so requested by the Majority Lenders shall, without prejudice to any other rights of the Lenders, at any time after the happening of an Event of Default which is continuing by notice to the Borrower declare that:

	10.2.1	the obligation of each Lender to make its Commitment available shall be terminated, whereupon the Commitment shall be reduced to zero forthwith; and/or

	10.2.2	the Loan and all interest accrued and all other sums payable whatsoever under the Security Documents have become due and payable, whereupon the same shall, immediately or in accordance with the terms of such notice, become due and payable.

	10.3	Demand Basis

If, under clause 10.2.2, the Agent has declared the Loan to be due and payable on demand, at any time thereafter the Agent may (and if so instructed by the Majority Lenders shall) by written notice to the Borrower (a) demand repayment of the Loan on such date as may be specified whereupon, regardless of any other provision of this Agreement, the Loan shall become due and payable on the date so specified together with all interest accrued and all other sums payable under this Agreement or (b) withdraw such declaration with effect from the date specified in such notice.

	11	INDEMNITIES

	11.1	General indemnity

The Borrower agrees to indemnify and shall procure that each Security Party shall indemnify each Bank on demand, without prejudice to any of such Bank’s other rights under any of the Security Documents, against any loss (including loss of Margin) or expense (including, without limitation, Break Costs and VAT (or equivalent)) which such Bank shall certify as sustained by it as a consequence of (i) any Default, (ii) any prepayment of the Loan being made under clauses 4.2, 4.3, 4.4, 8.2.1(a) or 12.1, (iii) any other repayment or prepayment of the Loan or part thereof being made otherwise than on an Interest Payment Date relating to the part of the Loan prepaid or repaid, (iv) the Loan not being advanced for any reason (excluding any default by the Agent, the Security Trustee or any Lender) after the Drawdown Notice has been given, (v) any breach by the Borrower or other Security Party of clauses 8.1.22 or 8.3.17 and/or (vi) any notice sent in accordance with Clause 17 purporting to be sent by a Security Party but being sent without proper authorisation or fraudulently.

	11.2	Environmental indemnity

The Borrower shall indemnify each Bank on demand and hold it harmless from and against all costs, claims, expenses, payments, charges, losses, demands, liabilities, actions, Proceedings, penalties, fines, damages, judgements, orders, sanctions or other outgoings of whatever nature which may be incurred or made or asserted whensoever against such Bank at any time, whether before or after the repayment in full of principal and interest under this Agreement, arising howsoever out of an Environmental Claim made or asserted against such Bank which would not have been, or been capable of being, made or asserted against such Bank had it not

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entered into any of the Security Documents or been involved in any of the resulting or associated transactions.

 

	11.3	Capital adequacy and reserve requirements indemnity

The Borrower shall promptly indemnify each Lender on demand against any cost incurred or loss suffered by such Lender as a result of its complying with (i) the minimum reserve requirements from time to time of the European Central Bank (ii) any capital adequacy directive of the European Union and/or (iii) any revised framework for international convergence of capital measurements and capital standards and/or any regulation imposed by any Government Entity in connection therewith, and/or in connection with maintaining required reserves with a relevant national central bank to the extent that such compliance or maintenance relates to such Lender’s Commitment and/or Contribution or deposits obtained by it to fund the whole or part thereof and to the extent such cost or loss is not recoverable by such Lender under clause 12.2.

	11.4	The Borrower shall indemnify and shall procure that each Security Party shall indemnify each Lender on demand, against any and all losses or expenses (including VAT (or equivalent)) which the Lender shall certify as sustained by it as a consequence of any notice, fax or email communication purporting to be sent to the Agent by the Borrower but being sent without proper authorisation or fraudulently).

	12	UNLAWFULNESS, INCREASED COSTS AND BAIL-IN

	12.1	Unlawfulness

If it is or becomes contrary to any law, directive or regulation for any Lender (the “Notifying Lender”) to contribute to the Loan or to maintain its Commitment or fund its Contribution to the Loan, the Notifying Lender shall promptly, through the Agent, give notice to the Borrower whereupon (a) the Notifying Lender’s Contribution and Commitment shall be reduced to zero and (b) the Borrower shall be obliged to prepay the Notifying Lender’s Contribution on the earlier of (i) the last day of the then current Interest Period (without premium or penalty) and (ii) the latest date permitted by the relevant law, directive or regulation together with interest accrued to the date of prepayment and all other sums payable by the Borrower under this Agreement.

Provided that if circumstances arise which would result in a notification under this Clause 12.1 then the Notifying Lender shall use reasonable endeavours to transfer its obligations, liabilities and rights under this Agreement and the Security Documents to another office or financial institution not affected by the circumstances but the Notifying Lender shall not be under any obligation to take any such action if, in its opinion, to do would or might:

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

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

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

	12.2	Increased costs

If the result of any change in, or in the interpretation or application of, or the introduction of, any law or any regulation, request or requirement (whether or not having the force of law, but,

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if not having the force of law, with which a Lender or, as the case may be, its holding company habitually complies), including (without limitation) those relating to Taxation, capital adequacy, liquidity, reserve assets, cash ratio deposits and special deposits, is to:

 

	12.2.1	subject any Lender to Taxes or change the basis of Taxation of any Lender with respect to any payment under any of the Security Documents (other than Taxes or Taxation on the overall net income, profits or gains of such Lender imposed in the jurisdiction in which its principal or lending office under this Agreement is located); and/or

	12.2.2	increase the cost to, or impose an additional cost on, any Lender or its holding company in making or keeping such Lender’s Commitment available or maintaining or funding all or part of such Lender’s Contribution; and/or

	12.2.3	reduce the amount payable or the effective return to any Lender under any of the Security Documents; and/or

	12.2.4	reduce any Lender’s or its holding company’s rate of return on its overall capital by reason of a change in the manner in which it is required to allocate capital resources to such Lender’s obligations under any of the Security Documents; and/or

	12.2.5	require any Lender or its holding company to make a payment or forgo a return on or calculated by reference to any amount received or receivable by such Lender under any of the Security Documents; and/or

	12.2.6	require any Lender or its holding company to incur or sustain a loss (including a loss of future potential profits) by reason of being obliged to deduct all or part of its Contribution or the Loan from its capital for regulatory purposes,

then and in each such case (subject to clause 12.3):

		(a)	such Lender shall notify the Borrower in writing of such event promptly upon its becoming aware of the same; and

		(b)	the Borrower shall on demand made at any time whether or not such Lender’s Contribution has been repaid, pay to the Agent for the account of such Lender the amount which such Lender specifies (in a certificate setting forth the basis of the computation of such amount but not including any matters which such Lender or its holding company regards as confidential) is required to compensate such Lender and/or (as the case may be) its holding company for such liability to Taxes, cost, reduction, payment , forgone return or loss.

Provided that the Banks shall try to ensure that any loss suffered by the Borrower as a result of the circumstances referred to above are kept to a minimum.

 For the purposes of this clause 12.2 and clause 15.10 “holding company” means the company or entity (if any) within the consolidated supervision of which a Lender is included.

	12.3	Exception

Nothing in clause 12.2 shall entitle any Lender to receive any amount in respect of compensation for any such liability to Taxes, increased or additional cost, reduction, payment, foregone return or loss to the extent that the same is (a) the subject of an additional payment under clause 6.6 or (b) attributable to a FATCA Deduction required to be made by a Party.

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	12.4	Contractual recognition of bail-in

            

Notwithstanding any other term of any Security Document or any other agreement, arrangement or understanding between the Parties, each Party acknowledges and accepts that any liability of any Party to any other Party under or in connection with the Security Documents may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:

		(a)	any Bail-In Action in relation to any such liability, including (without limitation):

		(i)	a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;

		(ii)	a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and

		(iii)	a cancellation of any such liability; and

		(b)	a variation of any term of any Security Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability.

	13	APPLICATION OF MONEYS, SET OFF, PRO-RATA PAYMENTS AND MISCELLANEOUS

	13.1	Application of moneys

All moneys received by the Agent and/or the Security Trustee under or pursuant to any of the Security Documents and expressed to be applicable in accordance with the provisions of this clause 13.1 or in a manner determined in the Security Trustee’s or (as the case may be) the Agent’s discretion, shall be applied in the following manner:

	13.1.1	first, in or towards payment, on a pro-rata basis, of any unpaid costs and expenses of the Banks or any of them under any of the Security Documents;

	13.1.2	secondly, in or towards payment of any fees payable to the Agent or any of the other Banks under, or in relation to, the Security Documents which remain unpaid;

	13.1.3	thirdly, in or towards payment to the Banks, on a pro rata basis, of any accrued interest and interest owing in respect of the Loan which shall have become due under any of the Security Documents but remains unpaid;

	13.1.4	fourthly, pro rata in or towards repayment of the Loan (whether the same is due and payable or not) and payment to the Swap Bank of any sum which shall have become due under the Master Agreement in respect of any interest rate swap and any other sums payable in the nature of Break Costs under the Master Agreement but remains unpaid and shall be applied, in respect of the Loan, pro rata against the outstanding repayment instalments;

	13.1.5	fifthly, in or towards payment to the Lenders, on a pro rata basis any Break Costs and any other sum relating to the Loan which shall have become due under any of the Security Documents but remains unpaid;

	13.1.6	sixthly, in or towards payment to any Bank of any other sums owing to it under any of the Security Documents; and

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	13.1.7	seventhly, the surplus (if any) shall be paid to the Borrower or to whomsoever else may then be entitled to receive such surplus.

 

	13.2	Set-off

	13.2.1	The Borrower irrevocably authorises each Bank (without prejudice to any of such Bank’s rights at law, in equity or otherwise), following the occurrence of an Event of Default which is continuing and without notice to the Borrower, to apply any credit balance to which the Borrower is then entitled standing upon any account of the Borrower with any branch of such Bank in or towards satisfaction of any sum due and payable from the Borrower to such Bank under any of the Security Documents.  For this purpose, each 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.

	13.2.2	No Bank shall be obliged to exercise any right given to it by this clause 13.2.  Each Bank shall notify the Borrower through the Agent forthwith upon the exercise or purported exercise of any right of set off giving full details in relation thereto and the Agent shall inform the other Banks.

	13.2.3	Nothing in this clause 13.2 shall be effective to create a charge or other security interest.

	13.3	Pro rata payments

	13.3.1	If at any time any Lender (the “Recovering Lender”) receives or recovers any amount owing to it by the Borrower under this Agreement (other than pursuant to any other Security Document)  by direct payment, set-off or in any manner other than by payment through the Agent pursuant to clauses 6.1 or 6.9 (not being a payment received from a Transferee Bank or a sub-participant in such Lender’s Contribution or any other payment of an amount due to the Recovering Lender for its sole account pursuant to clauses 3.6, 5, 6.6, 11.1, 11.2, 11.3, 12.1, or 12.2), the Recovering Lender shall, within two (2) Banking Days of such receipt or recovery (a “Relevant Receipt”) notify the Agent of the amount of the Relevant Receipt. If the Relevant Receipt exceeds the amount which the Recovering Lender would have received if the Relevant Receipt had been received by the Agent and distributed pursuant to clause 6.1 or 6.10 (as the case may be) then:

		(a)	within two (2) Banking Days of demand by the Agent, the Recovering Lender shall pay to the Agent an amount equal (or equivalent) to the excess;

		(b)	the Agent shall treat the excess amount so paid by the Recovering Lender as if it were a payment made by the Borrower and shall distribute the same to the Lenders (other than the Recovering Lenders) in accordance with clause 6.10; and

		(c)	as between the Borrower and the Recovering Lender the excess amount so re-distributed shall be treated as not having been paid but the obligations of the Borrower to the other Lenders shall, to the extent of the amount so re-distributed to them, be treated as discharged.

	13.3.2	If any part of the Relevant Receipt subsequently has to be wholly or partly refunded by the Recovering Lender (whether to a liquidator or otherwise) each Lender to which any part of such Relevant Receipt was so re-distributed shall on request from the Recovering Lender repay to the Recovering Lender such Lender’s pro-rata share of the amount which has to be refunded by the Recovering Lender.

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	13.3.3	Each Lender shall on request supply to the Agent such information as the Agent may from time to time request for the purposes of this clause 13.3.

 

	13.3.4	Notwithstanding the foregoing provisions of this clause 13.3, no Recovering Lender shall be obliged to share any Relevant Receipt which it receives or recovers pursuant to Proceedings taken by it to recover any sums owing to it under this Agreement with any other party which has a legal right to, but does not, either join in such Proceedings or commence and diligently pursue separate Proceedings to enforce its rights in the same or another court (unless the Proceedings instituted by the Recovering Lender are instituted by it without prior notice having been given to such party through the Agent).

	13.4	No release

For the avoidance of doubt it is hereby declared that failure by any Recovering Lender to comply with the provisions of clause 13.3 shall not release any other Recovering Lender from any of its obligations or liabilities under clause 13.3.

	13.5	No charge

The provisions of this clause 13 shall not, and shall not be construed so as to, constitute a charge or create or declare a trust by a Lender over all or any part of a sum received or recovered by it in the circumstances mentioned in clause 13.3.

	13.6	Further assurance

The Borrower undertakes with each Bank that the Security Documents shall both at the date of execution and delivery thereof and throughout the Facility Period be valid and binding obligations of the respective parties thereto which, with the rights of each Lender thereunder, are enforceable in accordance with their respective terms and that they will, at their expense, execute, sign, perfect and do, and will procure the execution, signing, perfecting and doing by each of the other Security Parties of, any and every such further assurance, document, act or thing as in the opinion of the Majority Lenders may be necessary or desirable for perfecting the security contemplated or constituted by the Security Documents.

	13.7	Conflicts

In the event of any conflict between this Agreement and any of the other  Security Documents, the provisions of this Agreement shall prevail.

	13.8	No implied waivers, remedies cumulative

No failure or delay on the part of any of the Banks to exercise any power, right or remedy under any of the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise by any Bank of any power, right or remedy preclude any other or further exercise thereof or the exercise of any other power, right or remedy.  The remedies provided in the Security Documents are cumulative and are not exclusive of any remedies provided by law.  No waiver by any Bank shall be effective unless it is in writing.

	13.9	Severability

If any provision of this Agreement is prohibited, invalid, illegal or unenforceable in any jurisdiction, such prohibition, invalidity, illegality or unenforceability shall not affect or impair

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howsoever the remaining provisions thereof or affect the validity, legality or enforceability of such provision in any other jurisdiction.

 

	13.10	Force Majeure

Regardless of any other provision of this Agreement, none of the Banks shall  be liable for any failure to perform the whole or any part of this Agreement resulting directly or indirectly from (i) the action or inaction or purported action of any governmental or local authority (ii) any strike, lockout, boycott or blockade (including any strike, lockout, boycott or blockade effected by or upon any Bank or any of its representatives or employees) (iii) any act of God (iv) any act of war (whether declared or not) or terrorism (v) any failure of any information technology or other operational systems or equipment affecting any Bank or (vi) any other circumstances whatsoever outside any Bank’s control.

	13.11	Amendments

This Agreement may be amended or varied only by an instrument in writing executed by all parties hereto who irrevocably agree that the provisions of this clause 13.11 may not be waived or modified except by an instrument in writing to that effect signed by all of them.

	13.12	Counterparts

This Agreement may be executed in any number of counterparts and all such counterparts taken together shall be deemed to constitute one and the same agreement which may be sufficiently evidenced by one counterpart.

	13.13	English language

All documents required to be delivered under and/or supplied whensoever in connection howsoever with any of the Security Documents and all notices, communications, information  and other written material whatsoever given or provided in connection howsoever therewith must either be in the English language or accompanied by an English translation (prepared at the cost of the Borrower) certified by a notary, lawyer or consulate acceptable to the Agent.

	14	ACCOUNTS AND RETENTIONS

	14.1	General

The Borrower undertakes with each Bank that it will ensure that:

	14.1.1	it will on or before the Drawdown Date, open the Earnings Account, the Retention Account and the Drydock Reserve Account in its name; and

	14.1.2	all moneys payable to the Borrower in respect of the Earnings of the Vessel shall, unless and until the Agent (acting on the instructions of the Majority Lenders) directs to the contrary pursuant to the provisions of the Mortgage, be paid to the Earnings Account, Provided however that if any of the moneys paid to the Earnings Account are payable in a currency other than USD the Account Bank shall then convert such moneys into USD at the Account Bank’s spot rate of exchange at the relevant time for the purchase of USD 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 USD with such currency).

	14.2	Earnings Accounts: withdrawals

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Unless the Agent (acting on the instructions of the Lenders) otherwise agrees in writing, the Borrower shall not withdraw any moneys from its Earnings Account at any time during the Facility Period except that, unless and until a Default which is continuing shall occur and the Agent (acting on the instructions of the Lenders) shall direct to the contrary, the Borrower may withdraw moneys from the Earnings Account (i) firstly to make the payments required under this Agreement, (ii) secondly, subject to the Borrower’s obligations under Clauses 8.1.8, 8.3.11 and 14.6, in payment of all expenses and fees required for the operation, supply, crewing, management, maintenance, insurance and trading of the Vessel and (iii) subject to there being at any time sufficient funds to pay amounts due under (i) and (ii) above as they fall due, thirdly for the general corporate purposes of the Borrower and/or the Corporate Guarantor (as the case may be).

 

	14.3	Retention Account: credits and withdrawals

	14.3.1	The Borrower undertakes with each Bank that, throughout the Facility Period, it will procure that, on each Retention Date there is paid (whether from the Earnings Account or elsewhere) to the Retention Account, the Retention Amount for such date.

	14.3.2	Unless and until there shall occur an Event of Default which is continuing (whereupon the provisions of clause 14.4 shall apply), all Retention Amounts credited to the Retention Account together with interest from time to time accruing or at any time accrued thereon must be applied by the Account Bank (and the Borrower hereby irrevocably authorises the Account Bank so to apply the same) upon each Repayment Date and/or on each day that interest is payable on the Loan or an Advance pursuant to clause 3.1, in or towards payment to the Agent of the instalment then falling due for repayment or, as the case may be, the amount of interest then due.  Each such application by the Account Bank shall constitute a payment in or towards satisfaction of the Borrower’s corresponding payment obligations 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 application by the Account Bank is insufficient to meet the same.

	14.3.3	Unless the Agent (acting on the instructions of the Majority Banks) otherwise agrees in writing and subject to clause 14.3.2, the Borrower shall not be entitled to withdraw any moneys from the Retention Account at any time during the Facility Period.

	14.4	Application of accounts

At any time after the occurrence of an Event of Default which is continuing, the Agent may (and on the instructions of the Majority Lenders shall), without notice to the Borrower, instruct the Account Bank to apply all moneys then standing to the credit of the Earnings Account and/or the Retention Account and/or the Drydock Reserve Account (together with interest from time to time accruing or accrued thereon) in or towards satisfaction of any sums due to the Banks or any of them under the Security Documents in the manner specified in clause 13.1.

	14.5	Charging of accounts

The Earnings Account, the Retention Account and the Drydock Reserve Account and all amounts from time to time standing to the credit thereof shall be subject to the security constituted and the rights conferred by the Accounts Pledge and the Borrower undertakes to take all such steps, and give all such instructions to the Account Bank to enable the Agent and/or the Security Trustee to have full unconditional access to the Earnings Account, the Retention Account and the Drydock Reserve Account following the occurrence of an Event of Default which is continuing.

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	14.6	Drydock Reserve Account

 

The Borrower undertakes with the Bank that, throughout the Facility Period, it will procure that, on each date Repayment Date, there is paid to the Drydock Reserve Account a sum in the amount of USD50,000 (the “Drydock Reserve Amount”) representing a pro rata estimate of future drydocking expenses of the Vessel, to be applied only in payment of the expenses (estimated at USD500,000) in respect of the drydocking of the Vessel scheduled in 2021.

	15	ASSIGNMENT, TRANSFER AND LENDING OFFICE

	15.1	Benefit and burden

This Agreement shall be binding upon, and enure for the benefit of, the Banks and the Borrower and their respective successors in title.

	15.2	No assignment by Borrower

The Borrower may not assign or transfer any of its rights or obligations under this Agreement.

	15.3	Transfers by Banks

Any Lender (the “Transferor Lender”) may at any time, following consultation with the Corporate Guarantor but without the need to obtain its consent:

		(a)	cause all or any part of its rights, benefits and/or obligations under this Agreement and the other Security Documents (including, but not limited to, the Loan and/or any commercial risk in granting the Loan in whole or in part) to be assigned or transferred (through the disposal of the Loan (including any collateral that may be associated with it), through credit derivatives or through the subparticipation of third parties in the Loan) to any one or more banks or other financial institutions (which may be any company affiliated to the Lender, a member of the European System of Central Banks, a banking or financial services institution, a financing company, an insurer, a social security or pension fund, a capital investment company, a financial intermediary or a special purpose vehicle with or without own legal status (a “Transferee Lender”) in each case by delivering to the Agent a Transfer Certificate duly completed and duly executed by the Transferor Lender and the Transferee Lender. No such transfer is binding on, or effective in relation to, the Borrower or the Agent unless (i) it is effected or evidenced by a Transfer Certificate which complies with the provisions of this clause 15.3 and is signed by or on behalf of the Transferor Lender, the Transferee Lender and the Agent (on behalf of itself, the Borrower and the other Banks) and (ii) such transfer of rights under the other Security Documents has been effected and registered.  Upon signature of any such Transfer Certificate by the Agent, which signature shall be effected as promptly as is practicable after such Transfer Certificate has been delivered to the Agent, and subject to the terms of such Transfer Certificate, such Transfer Certificate shall have effect as set out below; or

		(b)	make use of the KEV refinancing (Komfortable Einreichung und Verwaltung von Kreditforderungen).

For this purpose, the Transferor Lender shall be entitled to disclose the necessary information (e.g. the amount of the Loan, any due date, interest rate, name and address as well as data about the economic situation and data regarding creditworthiness) to the Transferee Lender or

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to such other persons as for technical, organisational or legal reasons need to be involved in verifying the valuation or effecting the transfer (e.g. rating agencies, auditors, tax consultants, solicitors or notaries public). To this extent, the Borrower hereby releases the Transferor Lender from the banking secrecy provisions.

 

The following further provisions shall have effect in relation to any Transfer Certificate:

	15.3.2	a Transfer Certificate may be in respect of a Lender’s rights in respect of all, or part of, its Commitment and shall be in respect of the same proportion of its Contribution;

	15.3.3	a Transfer Certificate shall only be in respect of rights and obligations of the Transferor Lender in its capacity as a Lender and shall not transfer its rights and obligations (if applicable) as the Agent and/or the Agent and/or the Security Trustee, or in any other capacity, as the case may be and such other rights and obligations may only be transferred in accordance with any applicable provisions of this Agreement;

	15.3.4	a Transfer Certificate shall take effect in accordance with English law as follows:

		(a)	to the extent specified in the Transfer Certificate, the Transferor Lender’s payment rights and all its other rights (other than those referred to in clause 15.3.2 above) under this Agreement are assigned to the Transferee Lender absolutely, free of any defects in the Transferor Lender’s title and of any rights or equities which the Borrower had against the Transferor Lender and the Transferee Lender assumes all obligations of the Transferor Lender as are transferred by such Transfer Certificate;

		(b)	the Transferor Lender’s Commitment is discharged to the extent specified in the Transfer Certificate;

		(c)	the Transferee Lender becomes a Lender with a Contribution and/or a Commitment in respect of the Loan Facility of the amounts specified in the Transfer Certificate;

		(d)	the Transferee Lender becomes bound by all the provisions of this Agreement and the Security Documents which are applicable to the Lenders generally, including those about pro-rata sharing and the exclusion of liability on the part of, and the indemnification of, the Agent and the Agent and the Security Trustee and to the extent that the Transferee Lender becomes bound by those provisions, the Transferor Lender ceases to be bound by them;

		(e)	the Loan or part of the Loan which the Transferee Lender makes after the Transfer Certificate comes into effect ranks in point of priority and security in the same way as it would have ranked had it been made by the Transferor Lender, assuming that any defects in the Transferor Lender’s title and any rights or equities of any Security Party against the Transferor Lender had not existed; and

		(f)	the Transferee Lender becomes entitled to all the rights under this Agreement which are applicable to the Lenders generally, including but not limited to those relating to the Majority Lenders and those under clauses 3.6, 5 and 12 and to the extent that the Transferee Lender becomes entitled to such rights, the Transferor Lender ceases to be entitled to them;

	15.3.5	the rights and equities of the Borrower or of any other Security Party referred to above include, but are not limited to, any right of set-off and any other kind of cross-claim; and

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	15.3.6	the Borrower, the Security Trustee, the Agent and the Lenders hereby irrevocably authorise and instruct the Agent to sign any such Transfer Certificate on their behalf and undertake not to withdraw, revoke or qualify such authority or instruction at any time.  Promptly upon its signature of any Transfer Certificate, the Agent shall notify the Borrower, the Transferor Lender and the Transferee Lender.

 

	15.4	Reliance on Transfer Certificate

	15.4.1	The Agent shall be entitled to rely on any Transfer Certificate believed by it to be genuine and correct and to have been presented or signed by the persons by whom it purports to have been presented or signed, and shall not be liable to any of the parties to this Agreement and the Security Documents for the consequences of such reliance.

	15.4.2	The Agent shall at all times during the continuation of this Agreement maintain a register in which it shall record the name, Commitments, Contributions and administrative details (including the lending office) from time to time of the Lenders holding a Transfer Certificate and the date at which the transfer referred to in such Transfer Certificate held by each Lender was transferred to such Lender, and the Agent shall make the said register available for inspection by any Lender or the Borrower during normal banking hours upon receipt by the Agent of reasonable prior notice requesting the Agent to do so.

	15.4.3	The entries on the said register shall, in the absence of manifest error, be conclusive in determining the identities of the Commitments, the Contributions and the Transfer Certificates held by the Lenders from time to time and the principal amounts of such Transfer Certificates and may be relied upon by all parties to this Agreement.

	15.5	Transfer fees and expenses

Any Transferor Lender who causes the transfer of all or any part of its rights, benefits and/or obligations under the Security Documents in accordance with the foregoing provisions of this clause 15, must, on each occasion, pay to the Agent a transfer fee of one thousand five hundred Dollars (USD 1,500) and, in addition, be responsible for all other costs and expenses (including, but not limited to, legal fees and expenses) associated therewith and all value added tax thereon, as well as those of the Agent (in addition to its fee as aforesaid) in connection with such transfer. Such fees, costs or expenses shall in no circumstances be for the account of any Security Party.

	15.6	Documenting transfers

If any Lender assigns all or any part of its rights or transfers all or any part of its rights, benefits and/or obligations as provided in clause 15.3, the Borrower undertakes, immediately on being requested to do so by the Agent and at the sole cost of the Transferor Lender, to enter into, and procure that the other Security Parties shall (at the cost of the Transferor Lender) enter into, such documents as may be necessary or desirable to transfer to the Transferee Lender all or the relevant part of such Lender’s interest in the Security Documents and all relevant references in this Agreement to such Lender shall thereafter be construed as a reference to the Transferor Lender and/or its Transferee Lender (as the case may be) to the extent of their respective interests.

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	15.7	Sub-Participation

A Lender may, following consultation with the Corporate Guarantor but without the need to obtain its consent, sub-participate all or any part of its rights and/or obligations under the Security Documents at its own expense without the consent of, consultation with or notice to, any Security Party.

	15.8	Lending office

Each Lender shall lend through its office at the address specified in Schedule 1 or, as the case may be, in any relevant Transfer Certificate or through any other office of such Lender selected from time to time by it through which such Lender wishes to lend for the purposes of this Agreement.  If the office through which a Lender is lending is changed pursuant to this clause 15.8, such Lender shall notify the Agent promptly of such change and the Agent shall notify the Borrower, the Security Trustee, the Agent and the other Lenders.

	15.9	Securitisation

The Agent or a Lender may include all or any part of the Loan in a securitisation or similar transaction following consultation with the Corporate Guarantor but without the need to obtain its consent. The Borrower will (and will procure that the Corporate Guarantor will) reasonably assist the Lenders as necessary to achieve a successful securitisation (or similar transaction) provided that the Borrower shall not be required to bear any third party costs related to any such securitisation.

	15.10	Disclosure of information

The Borrower hereby does, and shall procure that the Corporate Guarantor does, irrevocably authorise each Bank to give, divulge and reveal from time to time information and details relating to their accounts, the Vessel, the Security Documents, the Loan, the Commitments and any agreement entered into by the Borrower and/or Security Party or information provided by the Borrower or Security Party in connection with the Security Documents to:

		(i)	any private, public, or internationally recognised authorities and governmental institutions or regulatory authorities that are entitled to and have requested to obtain such information,

		(ii)	the Banks’ respective head offices, holding companies, subsidiaries, branches and affiliates and professional advisors,

		(iii)	any other parties to the Security Documents,

		(iv)	a rating agency or their professional advisors,

		(v)	any national or international numbering service provider,

		(vi)	any person with whom such Bank proposes to enter (or considers entering) into contractual relations in relation to the Loan and/or its Commitment or Contribution, and

		(vii)	any other person regarding the funding, re-financing, transfer, assignment, sale, sub-participation or operational arrangements or other transaction in relation to the Loan, its Contribution or its Commitment,

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including without limitation, for purposes in connection with a securitisation or similar transaction or any enforcement, preservation, assignment, transfer, sale or sub-participation of any of such Bank’s rights and obligations or in order to comply with any applicable laws or governmental requirements.

 

	15.11	Publication

The Agent and the Lenders may, at their own expense and with the prior consent of the Borrowers and/or the Corporate Guarantor, publish information in relation to this Agreement and the transaction herein set out in any internal or external publication for the purpose of, inter alia, preparing league table or company presentations, and in that regard may use the names and any logo or trademark of the Borrowers and/or the Corporate Guarantor, number and type of the Vessel, amount of the Loan and the role of the Agent and the Lenders.

	16	AGENT AND SECURITY TRUSTEE

	16.1	Appointment of the Agent

Each Lender and the Swap Bank irrevocably appoints the Agent as its agent for the purposes of this Agreement and such of the Security Documents to which it may be appropriate for the Agent to be party. Accordingly each of the Lenders and the Swap Bank hereby authorise the Agent:

	16.1.1	to execute such documents as may be approved by the Majority Lenders for execution by the Agent; and

	16.1.2	(whether or not by or through employees or agents) to take such action on such Lender’s behalf and to exercise such rights, remedies, powers and discretions as are specifically delegated to the Agent by any Security Document, together with such powers and discretions as are reasonably incidental thereto.

	16.2	Agent’s actions

Any action taken by the Agent under or in relation to any of the  Security Documents whether with requisite authority or on the basis of appropriate instructions received from the Majority Lenders (or as otherwise duly authorised) shall be binding on all the Banks.

	16.3	Agent’s duties

	16.3.1	The Agent shall promptly notify each Lender of the contents of each notice, certificate or other document received by it from the Borrower under or pursuant to clauses 8.1.1, 8.1.6, 8.1.9, 8.1.10, 8.1.12 and 8.1.16; and

	16.3.2	The Agent shall (subject to the other provisions of this clause 16) take (or instruct the Security Trustee to take) such action or, as the case may be, refrain from taking (or authorise the Security Trustee to refrain from taking) such action with respect to the exercise of any of its rights, remedies, powers and discretions as agent, as the Majority Lenders may direct.

	16.4	Security Trustee’s and Agent’s rights

The Security Trustee and the Agent may:

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	16.4.1	in the exercise of any right, remedy, power or discretion in relation to any matter, or in any context, not expressly provided for by this Agreement or any of the other Security Documents, act or, as the case may be, refrain from acting (or authorise the Security Trustee to act or refrain from acting) in accordance with the instructions of the Lenders, and shall be fully protected in so doing;

 

	16.4.2	unless and until it has received directions from the Majority Lenders, take such action or, as the case may be, refrain from taking such action (or authorise the Security Trustee to take or refrain from taking such action) in respect of a Default of which the Agent has actual knowledge as it shall consider advisable in the best interests of the Lenders (but shall not be obliged to do so);

	16.4.3	refrain from acting (or authorise the Security Trustee to refrain from acting) in accordance with any instructions of the Lenders to institute any Proceedings arising out of or in connection with  any of the Security Documents until it and/or the Security Trustee has been indemnified and/or secured to its satisfaction against any and all costs, expenses or liabilities (including legal fees) which it would or might incur as a result;

	16.4.4	deem and treat (i) each Lender as the person entitled to the benefit of the Contribution of such Lender for all purposes of this Agreement unless and until a notice shall have been filed with the Agent pursuant to clause 15.3 and shall have become effective, and (ii) the office set opposite the name of each of the Lenders in Schedule 1 as its lending office unless and until a written notice of change of lending office shall have been received by the Agent and the Agent may act upon any such notice unless and until the same is superseded by a further such notice;

	16.4.5	rely as to matters of fact which might reasonably be expected to be within the knowledge of any Security Party upon a certificate signed by any director or officer of the relevant Security Party on behalf of the relevant Security Party; and

	16.4.6	do anything which is in its opinion necessary or desirable to comply with any law or regulation in any jurisdiction.

	16.5	No Liability of Agent

None of the Security Trustee, the Agent nor any of their respective employees and agents shall:

	16.5.1	be obliged to make any enquiry as to the use of any of the proceeds of the Loan unless (in the case of the Agent) so required in writing by a Lender, in which case the Agent shall promptly make the appropriate request to the Borrower; or

	16.5.2	be obliged to make any enquiry as to any breach or default by the Borrower or any other Security Party in the performance or observance of any of the provisions of the Security Documents or as to the existence of a Default unless (in the case of the Agent) the Agent has actual knowledge thereof or has been notified in writing thereof by a Bank, in which case the Agent shall promptly notify the Banks of the relevant event or circumstance; or

	16.5.3	be obliged to enquire whether or not any representation or warranty made by the Borrower or any other Security Party pursuant to this Agreement or any of the other Security Documents is true; or

	16.5.4	be obliged to do anything (including, without limitation, disclosing any document or information) which would, or might in its opinion, be contrary to any law or regulation or be a

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breach of any duty of confidentiality or otherwise be actionable or render it liable to any person; or

 

	16.5.5	be obliged to account to any Lender for any sum or the profit element of any sum received by it for its own account; or

	16.5.6	be obliged to institute any Proceedings arising out of or in connection with any of the  Security Documents other than on the instructions of the Majority Lenders; or

	16.5.7	be liable to any Lender for any action taken or omitted under or in connection with any of the  Security Documents unless caused by its gross negligence or wilful misconduct.

For the purposes of this clause 16, none of the Security Trustee or the Agent shall be treated as having actual knowledge of any matter of which the corporate finance or any other division outside the agency or loan administration department of the Security Trustee or the Agent or the person for the time being acting as the Security Trustee or the Agent may become aware in the context of corporate finance, advisory or lending activities from time to time undertaken by the Security Trustee or the Agent or, as the case may be, the Security Trustee or Agent for any Security Party or any other person which may be a trade competitor of any Security Party or may otherwise have commercial interests similar to those of any Security Party.

	16.6	Non –reliance on Security Trustee, Agent

Each Lender and the Swap Bank acknowledges that it has not relied on any statement, opinion, forecast or other representation made by the  Security Trustee or the Agent to induce it to enter into any of the Security Documents and that it has made and will continue to make, without reliance on the Security Trustee or the Agent and based on such documents as it considers appropriate, its own appraisal of the creditworthiness of the Security Parties and its own independent investigation of the financial condition, prospects and affairs of the Security Parties in connection with the making and continuation of such Lender’s Commitment or Contribution under this Agreement.  Neither of the Security Trustee and the Agent shall have any duty or responsibility, either initially or on a continuing basis, to provide any Lender or the Swap Bank with any credit or other information with respect to any Security Party whether coming into its possession before the making of the Loan or at any time or times thereafter other than as provided in clause 16.3.1.

	16.7	No responsibility on the Security Trustee, Agent for Borrower’s performance

Neither of the  Security Trustee or the Agent shall have any responsibility or liability to any Lender or the Swap Bank:

	16.7.1	on account of the failure of any Security Party to perform its obligations under any of the Security Documents; or

	16.7.2	for the financial condition of any Security Party; or

	16.7.3	for the completeness or accuracy of any statements, representations or warranties in any of the Security Documents or any document delivered under any of the Security Documents; or

	16.7.4	for the execution, effectiveness, adequacy, genuineness, validity, enforceability or admissibility in evidence of any of the Security Documents or of any certificate, report or other document executed or delivered under any of the Security Documents; or

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	16.7.5	to investigate or make any enquiry into the title of the Borrower or any other Security Party to the Vessel or any other security or any part thereof; or

 

	16.7.6	for the failure to register any of the Security Documents with any official or regulatory body or office or elsewhere; or

	16.7.7	for taking or omitting to take any other action under or in relation to any of the Security Documents or any aspect of any of the Security Documents; or

	16.7.8	on account of the failure of the Security Trustee to perform or discharge any of its duties or obligations under the Security Documents; or

	16.7.9	otherwise in connection with the Security Documents or their negotiation or for acting (or, as the case may be, refraining from acting) in accordance with the instructions of the Lenders.

	16.8	Reliance on documents and professional advice

Each of the Security Trustee and the Agent shall be entitled to rely on any communication, instrument or document believed by it to be genuine and correct and to have been signed or sent by the proper person and shall be entitled to rely as to legal or other professional matters on opinions and statements of any legal or other professional advisers selected or approved by it (including those in the Security Trustee’s or Agent’s employment).

	16.9	Other dealings

Each of the Security Trustee and the Agent may, without any liability to account to the Lenders, accept deposits from, lend money to, and generally engage in any kind of banking or other business with, and provide advisory or other services to, any Security Party or any company in the same group of companies as such Security Party or any of the Lenders as if it were not the  Security Trustee or the Agent.

	16.10	Rights of Agent as Lender; no partnership

With respect to its own Commitment and Contribution (if any) the  Security Trustee and the Agent shall have the same rights and powers under the Security Documents as any other Lender and may exercise the same as though it were not performing the duties and functions delegated to it under this Agreement and the term “Lenders” shall, unless the context clearly otherwise indicates, include the  Security Trustee and the Agent in their respective individual capacity as a Lender. This Agreement shall not be construed so as to constitute a partnership between the parties or any of them.

	16.11	Amendments and waivers

	16.11.1	Subject to clause 16.11, the Security Trustee and/or the Agent (as the case may be) may, with the consent of the Majority Lenders (or if and to the extent expressly authorised by the other provisions of any of the Security Documents) and, if so instructed by the Majority Lenders, shall:

		(a)	agree (or authorise the Security Trustee to agree) amendments or modifications to any of the Security Documents with the Borrower and/or any other Security Party; and/or

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		(b)	
vary or waive breaches of, or defaults under, or otherwise excuse performance of, any provision of any of the other Security Documents by the Borrower and/or any other Security Party (or authorise the Security Trustee to do so). Any such action so authorised and effected by the Agent shall be documented in such manner as the  Security Trustee and/or the Agent (as the case may be) shall (with the approval of the Majority Lenders) determine, shall be promptly notified to the Lenders by the  Security Trustee and/or the Agent (as the case may be) and (without prejudice to the generality of clause 16.2) shall be binding on the Lenders.

 

	16.11.2	Except with the prior written consent of the Lenders, the  Security Trustee and the Agent shall have no authority on behalf of the Lenders to agree (or authorise the Security Trustee to agree) with the Borrower and/or any other Security Party any amendment or modification to any of the Security Documents or to grant (or authorise the Security Trustee to grant) waivers in respect of breaches or defaults or to vary or excuse (or authorise the Security Trustee to vary or excuse) performance of or under any of the Security Documents by the Borrower and/or any other Security Party, if the effect of such amendment, modification, waiver or excuse would be to:

		(a)	reduce the Margin, postpone the due date or reduce the amount of any payment of principal, interest  or other amount payable by any Security Party under any of the Security Documents;

		(b)	change the currency in which any amount is payable by any Security Party under any of the Security Documents;

		(c)	increase any Lender’s Commitment;

		(d)	extend any Maturity Date;

		(e)	change any provision of any of the Security Documents which expressly or impliedly requires the approval or consent of all the Lenders such that the relevant approval or consent may be given otherwise than with the sanction of all the Lenders;

		(f)	change the order of distribution under clauses 6.10 and 13.1;

		(g)	change this clause 16.11;

		(h)	change the definition of “Majority Lenders” in clause 1.2;

		(i)	release any Security Party from the security constituted by any Security Document (except as required by the terms thereof or by law) or change the terms and conditions upon which such security or guarantee may be, or is required to be, released;

		(j)	result in a FATCA Deduction, unless the Agent has given the Lenders ten Banking Days prior notice or each Lender is a FATCA Protected Lender. The Agent shall notify the Lenders reasonably promptly of any amendments or waivers proposed by the Borrower

provided that:

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		(i)	if the Agent or a Lender reasonably believes that an amendment or waiver may constitute a “material modification” for the purposes of FATCA that may result (directly or indirectly) in a Party being required to make a FATCA Deduction and the Agent or that Lender (as the case may be) notifies the Company and the Agent accordingly, that amendment or waiver may, subject to paragraph (ii) below, not be effected without the consent of the Agent or that Lender (as the case may be); and

 

		(ii)	the consent of a Lender shall not be required pursuant to paragraph (i) above if that Lender is a FATCA Protected Lender.

	16.11.3	Except with the prior written consent of the Swap Bank, the  Security Trustee and the Agent shall have no authority on behalf of the Lenders to agree (or authorise the Security Trustee to agree) with the Borrower and/or any other Security Party any amendment or modification to any of the Security Documents or to grant (or authorise the Security Trustee to grant) waivers in respect of breaches or defaults or to vary or excuse (or authorise the Security Trustee to vary or excuse) performance of or under any of the Security Documents by the Borrower and/or any other Security Party, if the effect of such amendment, modification, waiver or excuse would be to materially and adversely affect the rights or interest of the Swap Bank under the Master Agreement.

	16.12	Reimbursement and indemnity by Lenders

Each Lender shall reimburse the  Security Trustee and the Agent (rateably in accordance with such Lender’s Commitment or, after the Loan has been drawn, its Contribution,) to the extent that the Security Trustee or the Agent is not reimbursed by the Borrower, for the costs, charges and expenses incurred by the  Security Trustee or the Agent which are expressed to be payable by the Borrower under clause 5.5 including (in each case), without limitation, the fees and expenses of legal or other professional advisers provided that, if following any payment to the  Security Trustee or the Agent by a Lender under this clause the  Security Trustee or the Agent receives payment from the Borrower in respect of the same costs, fees or expenses, the  Security Trustee or the Agent shall upon receipt thereof reimburse the relevant Lender.  Each Lender must on demand indemnify the  Security Trustee or the Agent (rateably in accordance with such Lender’s  Commitment or, after the Loan has been drawn, its Contribution) against all liabilities, damages, costs and claims whatsoever incurred by the  Security Trustee in connection with any of the Security Documents or the performance of its duties under any of the Security Documents or any action taken or omitted by the  Security Trustee or, as the case may be, the Agent, under any of the Security Documents, unless such liabilities, damages, costs or claims arise from the  Security Trustee’s or as the case may be, the Agent’s own gross negligence or wilful misconduct.

	16.13	Retirement of the Agent

	16.13.1	The Agent may, having given to the Borrower and each of the Lenders not less than fifteen (15) days’ notice of its intention to do so, retire from its appointment as the Agent under this Agreement, provided that no such retirement shall take effect unless there has been appointed by the Lenders as a successor agent, with the prior written consent of the Borrower and the Corporate Guarantor (such consent not to be unreasonably withheld or delayed):

		(a)	a company in the same group of companies as the  Agent nominated by the Agent,

		(b)	a Lender nominated by the Majority Lenders or, failing such a nomination,

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		(c)	any reputable and experienced bank or financial institution nominated by the retiring Agent.

 

Any corporation into which the retiring Agent may be merged or converted or any corporation with which the Agent may be consolidated or any corporation resulting from any merger, conversion, amalgamation, consolidation or other reorganisation to which the  Agent shall be a party shall, to the extent permitted by applicable law, be the successor Agent under this Agreement and the other Security Documents without the execution or filing of any document or any further act on the part of any of the parties to the  Security Documents save that notice of any such merger, conversion, amalgamation, consolidation or other reorganisation shall forthwith be given to each Security Party and the Lenders.

	16.13.2	If the Majority Lenders, acting reasonably, are of the opinion that the Agent is unable to fulfil its respective obligations under this Agreement in a professional and acceptable manner, then they may require the  Agent, by written notice, to resign in accordance with clause 16.13.1, which the Agent shall promptly do, and the terms of clause 16.13.1 shall apply to the appointment of any substitute Agent, save that the same shall be appointed by the Majority Lenders and not by all of the Lenders.

	16.13.3	Upon any such successor as aforesaid being appointed, the retiring Agent shall be discharged from any further obligation under the Security Documents (but shall continue to have the benefit of this clause 16 in respect of any action it has taken or refrained from taking prior to such discharge) and its successor and each of the other parties to this Agreement shall have the same rights and obligations among themselves as they would have had if such successor had been a party to this Agreement in place of the retiring Agent. The retiring Agent shall (at its own expense) provide its successor with copies of such of its records as its successor reasonably requires to carry out its functions under the Security Documents.

	16.14	Appointment and retirement of Security Trustee

	16.14.1	Appointment

Each of the Banks irrevocably appoints the Security Trustee as its Security Trustee and trustee for the purposes of the Security Documents, in each case on the terms set out in this Agreement. Accordingly, each of the Lenders, the Swap Bank and the Agent hereby authorises the Security Trustee (whether or not by or through employees or agents) to take such action on its behalf and to exercise such rights, remedies, powers and discretions as are specifically delegated to the Security Trustee by this Agreement and/or the Security Documents, together with such powers and discretions as are reasonably incidental thereto.

	16.14.2	Retirement

		(a)	Without prejudice to clause 16.13, the Security Trustee may, having given to the Borrower and each of the Lenders and the Swap Bank not less than fifteen (15) days’ notice of its intention to do so, retire from its appointment as Security Trustee under this Agreement and any Trust Deed, provided that no such retirement shall take effect unless there has been appointed by the Lenders and the Agent as a successor Security Trustee and trustee, with the prior written consent of the Borrower and the Corporate Guarantor (such consent not to be unreasonably withheld or delayed):

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		(i)	a company in the same group of companies of the Security Trustee nominated by the Security Trustee which the Lenders hereby irrevocably and unconditionally agree to appoint or, failing such nomination,

 

		(ii)	a Lender or trust corporation nominated by the Majority Lenders or, failing such a nomination,

		(iii)	any bank or trust corporation nominated by the retiring Security Trustee,

and, in any case, such successor Security Trustee and trustee shall have duly accepted such appointment by delivering to the Agent (i) written confirmation (in a form acceptable to the Agent) of such acceptance agreeing to be bound by this Agreement in the capacity of Security Trustee as if it had been an original party to this Agreement and (ii) a duly executed Trust Deed.

		(b)	Any corporation into which the retiring Security Trustee may be merged or converted or any corporation with which the Security Trustee may be consolidated or any corporation resulting from any merger, conversion, amalgamation, consolidation or other reorganisation to which the Security Trustee shall be a party shall, to the extent permitted by applicable law, be the successor Security Trustee under this Agreement, any Trust Deed and the other Security Documents without the execution or filing of any document or any further act on the part of any of the parties to this Agreement, any Trust Deed and the other Security Documents save that notice of any such merger, conversion, amalgamation, consolidation or other reorganisation shall forthwith be given to each Security Party, the Swap Bank and the Lenders.

		(c)	If the Majority Lenders, acting reasonably, are of the opinion that the Security Trustee or Agent is unable to fulfil its respective obligations under this Agreement in a professional and acceptable manner, then they may require the  Security Trustee or Agent, by written notice, to resign in accordance with clause 16.14.2(a), which the Agent shall promptly do, and the terms of clause 16.14.2(a) shall apply to the appointment of any substitute Security Trustee, save that the same shall be appointed by the Majority Lenders and not by all of the Lenders.

		(d)	Upon any such successor as aforesaid being appointed, the retiring Security Trustee shall be discharged from any further obligation under the Security Documents (but shall continue to have the benefit of this clause 16 in respect of any action it has taken or refrained from taking prior to such discharge) and its successor and each of the other parties to this Agreement shall have the same rights and obligations among themselves as they would have had if such successor had been a party to this Agreement in place of the retiring Security Trustee. The retiring Security Trustee shall (at its own expense) provide its successor with copies of such of its records as its successor requires to carry out its functions under the Security Documents.

	16.15	Powers and duties of the Security Trustee

	16.15.1	The Security Trustee shall have no duties, obligations or liabilities to any of the Lenders and the Agent beyond those expressly stated in any of the Security Documents.  Each of the Agent, the Swap Bank and the Lenders hereby authorises the Security Trustee to enter into and execute:

		(a)	each of the Security Documents to which the Security Trustee is or is intended to be a party; and

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		(b)	any and all such other Security Documents as may be approved by the Agent in writing (acting on the instructions of the Majority Lenders) for entry into by the Security Trustee, and, in each and every case, to hold any and all security thereby created upon trust for the Lenders, the Swap Bank and the Agent for the time being in the manner contemplated by this Agreement.

 

	16.15.2	Subject to clause 16.15.3 the Security Trustee may, with the prior consent of the Majority Lenders communicated in writing by the Agent, concur with any of the Security Parties to:

		(a)	amend, modify or otherwise vary any provision of the Security Documents to which the Security Trustee is or is intended to be a party; or

		(b)	waive breaches of, or defaults under, or otherwise excuse performance of, any provision of the Security Documents to which the Security Trustee is or is intended to be a party; or

		(c)	give any consents to any Security Party in respect  of any provision of any Security Document

Any such action so authorised and effected by the Security Trustee shall be promptly notified to the Lenders, the Swap Bank and the Agent by the Security Trustee and shall be binding on the other Banks.

	16.15.3	The Security Trustee shall not concur with any Security Party with respect to any of the matters described in clause 16.11.2 without the consent of the Lenders communicated in writing by the Agent.

	16.15.4	The Security Trustee shall (subject to the other provisions of this clause 16) take such action or, as the case may be, refrain from taking such action, with respect to any of its rights, powers and discretions as Security Trustee and trustee, as the Agent may direct.  Subject as provided in the foregoing provisions of this clause, unless and until the Security Trustee has received such instructions from the Agent, the Security Trustee may, but shall not be obliged to, take (or refrain from taking) such action under or pursuant to the Security Documents referred to in clause 16.14 as the Security Trustee shall deem advisable in the best interests of the Banks provided that (for the avoidance of doubt), to the extent that this clause might otherwise be construed as authorising the Security Trustee to take, or refrain from taking, any action of the nature referred to in clause 16.15.2 - and for which the prior consent of the Lenders is expressly required under clause 16.15.3 - clauses 16.15.2 and 16.15.3 shall apply to the exclusion of this clause.

	16.15.5	None of the Lenders, the Swap Bank nor the Agent shall have any independent power to enforce any of the Security Documents referred to in clause 16.14 or to exercise any rights, discretions or powers or to grant any consents or releases under or pursuant to such Security Documents or any of them or otherwise have direct recourse to the security and/or guarantees constituted by such Security Documents or any of them except through the Security Trustee.

	16.15.6	For the purpose of this clause 16, the Security Trustee may, rely and act in reliance upon any information from time to time furnished to the Security Trustee by the Agent (whether pursuant to clause 16.15.7 or otherwise) unless and until the same is superseded by further such information, so that the Security Trustee shall have no liability or responsibility to any party as

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a consequence of placing reliance on and acting in reliance upon any such information unless the Security Trustee has actual knowledge that such information is inaccurate or incorrect.

 

	16.15.7	Without prejudice to the foregoing each of the Agent, the Swap Bank and the Lenders (whether directly or through the Agent) shall provide the Security Trustee with such written information as it may require for the purpose of carrying out its duties and obligations under the Security Documents referred to in clause 16.14.

	16.16	Trust provisions

	16.16.1	The trusts constituted or evidenced in or by this Agreement and the Trust Deed shall remain in full force and effect until whichever is the earlier of:

		(a)	the expiration of a period of eighty (80) years from the date of this Agreement; and

		(b)	receipt by the Security Trustee of confirmation in writing by the Agent that there is no longer outstanding any Indebtedness (actual or contingent) which is secured or guaranteed or otherwise assured by or under any of the Security Documents,

and the parties to this Agreement declare that the perpetuity period applicable to this Agreement and the trusts declared by the Trust Deed shall for the purposes of the Perpetuities and Accumulations Act 1964 be the period of eighty (80) years from the date of this Agreement.

	16.16.2	In its capacity as trustee in relation to the Security Documents specified in clause 16.14, the Security Trustee shall, without prejudice to any of the powers, discretions and immunities conferred upon trustees by law (and to the extent not inconsistent with the provisions of any of those Security Documents), have all the same powers and discretions as a natural person acting as the beneficial owner of such property and/or as are conferred upon the Security Trustee by any of those Security Documents.

	16.16.3	It is expressly declared that, in its capacity as trustee in relation to the Security Documents specified in clause 16.14, the Security Trustee shall be entitled to invest moneys forming part of the security and which, in the opinion of the Security Trustee, may not be paid out promptly following receipt in the name or under the control of the Security Trustee in any of the investments for the time being authorised by law for the investment by trustees of trust moneys or in any other property or investments whether similar to the aforesaid or not or by placing the same on deposit in the name or under the control of the Security Trustee as the Security Trustee may think fit without being under any duty to diversify its investments and the Security Trustee may at any time vary or transpose any such property or investments for or into any others of a like nature and shall not be responsible for any loss due to depreciation in value or otherwise of such property or investments. Any investment of any part or all of the security may, at the discretion of the Security Trustee, be made or retained in the names of nominees.

	16.17	Independent action by Banks

None of the Banks shall enforce, exercise any rights, remedies or powers or grant any consents or releases under or pursuant to, or otherwise have a direct recourse to the security and/or guarantees constituted by any of the Security Documents without the prior written consent of the Majority Lenders but, provided such consent has been obtained, it shall not be necessary for any other Bank to be joined as an additional party in any Proceedings for this purpose.

	16.18	Common Agent and Security Trustee

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The Agent and the Security Trustee have entered into the Security Documents in their separate capacities (a) as agent for the Lenders under and pursuant to this Agreement (in the case of the Agent) and (b) as Security Trustee and trustee for the Lenders, the Swap Bank and the Agent under and pursuant to this Agreement, to hold the guarantees and/or security created by the Security Documents specified in clause 16.14 on the terms set out in such Security Documents (in the case of the Security Trustee). If and when the Agent and the Security Trustee are the same entity and any Security Document provides for the Agent to communicate with or provide instructions to the Security Trustee (and vice versa), all parties to this Agreement agree that any such communications or instructions on such occasions are unnecessary and are hereby waived.

 

	16.19	Co-operation to achieve agreed priorities of application

The Lenders and the Agent shall co-operate with each other and with the Security Trustee and any receiver under the Security Documents in realising the property and assets subject to the Security Documents and in ensuring that the net proceeds realised under the Security Documents after deduction of the expenses of realisation are applied in accordance with clause 13.1.

	16.20	The Prompt distribution of proceeds

Moneys received by any of the Banks (whether from a receiver or otherwise) pursuant to the exercise of (or otherwise by virtue of the existence of) any rights and powers under or pursuant to any of the Security Documents shall (after providing for all costs, charges, expenses and liabilities and other payments ranking in priority) be paid to the Agent for distribution (in the case of moneys so received by any of the Banks other than the Agent or the Security Trustee) and shall be distributed by the Agent or, as the case may be, the Security Trustee (in the case of moneys so received by the Agent or, as the case may be, the Security Trustee) in each case in accordance with clause 13.1.  The Agent or, as the case may be, the Security Trustee shall make each such application and/or distribution as soon as is practicable after the relevant moneys are received by, or otherwise become available to, the Agent or, as the case may be, the Security Trustee save that (without prejudice to any other provision contained in any of the Security Documents) the Agent or, as the case may be, the Security Trustee (acting on the instructions of the Majority Lenders) or any receiver may credit any moneys received by it to a suspense account for so long and in such manner as the Agent or such receiver may from time to time determine with a view to preserving the rights of the Agent and/or the Security Trustee and/or the Lenders and/or the Swap Bank or any of them to provide for the whole of their respective claims against the Borrower or any other person liable.

	16.21	Reconventioning

The Agent shall be entitled to make such amendments to this Agreement as it may determine to be necessary to take account of any changes in market practices as a consequence of the European Monetary Union (whether as to the settlement or rounding of obligations, business days, the calculation of interest or otherwise whatsoever).  So far as possible such amendments shall be such as to put the parties in the same position as if the event or events giving rise to the need to amend this Agreement had not occurred.  Any amendment so made to this Agreement by the Agent shall be promptly notified to the other parties hereto and shall be binding on all parties hereto.

	16.22	Exclusivity

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Without prejudice to the Borrower’s rights, in certain instances, to give their consent thereunder, clauses 15 and 16 are for the exclusive benefit of the Banks.

 

	17	NOTICES AND OTHER MATTERS

	17.1	Notices

	17.1.1	unless otherwise specifically provided herein, every notice under or in connection with this Agreement shall be given in English by letter delivered personally and/or sent by post and/or transmitted by fax and/or electronically;

	17.1.2	in this clause “notice” includes any demand, consent, authorisation, approval, instruction, certificate, request, waiver or other communication.

	17.2	Addresses for communications, effective date of notices

	17.2.1	Subject to clause 17.2.2, clause 17.2.5 and 17.3 notices to the Borrower shall be deemed to have been given and shall take effect when received in full legible form by the Borrower at the address and/or the fax number appearing below (or at such other address or fax number as the Borrower may hereafter specify for such purpose to the Agent by notice in writing);

		Address	

c/o Euroseas Ltd.

4 Messogiou & Evropis Street

151 24 Maroussi

Greece

		Fax no:	+30 211 1804097

 

		Attn:	Anastasios Aslidis / George Kavalis

 

	17.2.2	notwithstanding the provisions of clause 17.2.1 or clause 17.2.5, a notice of Default and/or a notice given pursuant to clause 10.2 or clause 10.3 to the Borrower shall be deemed to have been given and shall take effect when delivered, sent or transmitted by the Banks or any of them to the Borrower to the address or fax number referred to in clause 17.2.1;

	17.2.3	subject to clause 17.2.5, notices to the Agent and/or the Security Trustee and/or the Swap Bank shall be deemed to be given, and shall take effect, when received in full legible form by the Agent and/or the Security Trustee at the address and/or the fax number address appearing below (or at any such other address or fax number as the Agent and/or the Security Trustee and/or the Swap Bank (as appropriate) may hereafter specify for such purpose to the Borrower and the other Lenders by notice in writing);

		Address	
Friedrichswall 10

Hannover 30159

Germany

                       

		Fax no:	+49 511 361 4785

		Attn:	Ship and Aircraft Finance Department, Christina Winkler

	17.2.4	subject to clause 17.2.5 and 17.3, notices to a Lender shall be deemed to be given and shall take effect when received in full legible form by such Lender at its address and/or fax number

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specified in Schedule 1 or in any relevant Transfer Certificate (or at any other address or fax number as such Lender may hereafter specify for such purpose to the other Banks); and

 

	17.2.5	if under clause 17.2.1 or clause 17.2.3 a notice would be deemed to have been given and effective on a day which is not a working day in the place of receipt or is outside the normal business hours in the place of receipt, the notice shall be deemed to have been given and to have taken effect at the opening of business on the next working day in such place.

	17.3	Electronic Communication

	17.3.1	Any communication to be made by and/or between the Banks or any of them and the Security Parties or any of them under or in connection with the Security Documents or any of them may be made by electronic mail or other electronic means, if and provided that all such parties:

		(a)	notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and

		(b)	notify each other of any change to their electronic mail address or any other such information supplied by them.

	17.3.2	Any electronic communication made by and/or between the Banks or any of them and the Security Parties or any of them will be effective only when actually received in readable form and, in the case of any electronic communication made by the Borrower or the Lenders to the Agent, only if it is addressed in such manner as the Agent shall specify for this purpose.

	17.4	Notices through the Agent

Every notice under this Agreement or (unless otherwise provided therein) any other Security Document to be given by the Borrower to any other party, shall be given to the Agent for onward transmission as appropriate and every notice under this Agreement to be given to the Borrower shall (except as otherwise provided in the Security Documents) be given to the Borrower by the Agent.

	18	GOVERNING LAW

This Agreement and any non-contractual obligations arising out of or in connection with it is governed by and shall be construed in accordance with English law.

	19	JURISDICTION

	19.1	Exclusive Jurisdiction

For the benefit of the Banks, and subject to clause 19.4 below, the Borrower hereby irrevocably agrees that the courts of England shall have exclusive jurisdiction:

	19.1.1	to settle any disputes or other matters whatsoever arising under or in connection with this Agreement (or any non-contractual obligations arising out of or in connection with this Agreement) and any disputes or other such matters arising in connection with the negotiation, validity or enforceability of this Agreement or any part thereof, whether the alleged liability shall arise under the laws of England or under the laws of some other country and regardless of whether a particular cause of action may successfully be brought in the English courts; and

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	19.1.2	
to grant interim remedies or other provisional or protective relief.

 

	19.2	Submission and service of process

The Borrower accordingly irrevocably and unconditionally submits to the jurisdiction of the English courts.  Without prejudice to any other mode of service the Borrower:

	19.2.1	irrevocably empowers and appoints Hill Dickinson International at present of The Broadgate Tower, 20 Primrose Street, London EC2A 2EW, England as its agent to receive and accept on its behalf any process or other document relating to any proceedings before the English courts in connection with this Agreement;

	19.2.2	agrees to maintain such an agent for service of process in England from the date hereof until the end of the Facility Period;

	19.2.3	agrees that failure by a process agent to notify the Borrower of service of process will not invalidate the proceedings concerned;

	19.2.4	without prejudice to the effectiveness of service of process on its agent under clause 19.2.1 above but as an alternative method, consents to the service of process relating to any such proceedings by mailing or delivering a copy of the process to its address for the time being applying under clause 17.2;

	19.2.5	agrees that if the appointment of any person mentioned in clause 19.2.1 ceases to be effective, the Borrower shall immediately appoint a further person in England to accept service of process on its behalf in England and, failing such appointment within seven (7) days the Agent shall thereupon be entitled and is hereby irrevocably authorised by the Borrower in those circumstances to appoint such person by notice to the Borrower.

	19.3	Forum non conveniens and enforcement abroad

The Borrower:

	19.3.1	waives any right and agrees not to apply to the English court or other court in any jurisdiction whatsoever to stay or strike out any proceedings commenced in England on the ground that England is an inappropriate forum and/or that Proceedings have been or will be started in any other jurisdiction in connection with any dispute or related matter falling within clause 19.1; and

	19.3.2	agrees that a judgment or order of an English court in a dispute or other matter falling within clause 19.1 shall be conclusive and binding on the Borrower and may be enforced against it in the courts of any other jurisdiction.

	19.4	Right of Agent, but not Borrower, to bring proceedings in any other jurisdiction

	19.4.1	Nothing in this clause 19 limits the right of any Lender to bring Proceedings, including third party proceedings, against the Borrower, or to apply for interim remedies, in connection with this Agreement in any other court and/or concurrently in more than one jurisdiction;

	19.4.2	the obtaining by any Lender of judgment in one jurisdiction shall not prevent such Lender from bringing or continuing proceedings in any other jurisdiction, whether or not these shall be founded on the same cause of action.

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	19.5	Enforceability despite invalidity of Agreement

            

Without prejudice to the generality of clause 13.9, the jurisdiction agreement contained in this clause 19 shall be severable from the rest of this Agreement and shall remain valid, binding and in full force and shall continue to apply notwithstanding this Agreement or any part thereof being held to be avoided, rescinded, terminated, discharged, frustrated, invalid, unenforceable, illegal and/or otherwise of no effect for any reason.

	19.6	Effect in relation to claims by and against non-parties

	19.6.1	For the purpose of this clause “Foreign Proceedings” shall mean any Proceedings except proceedings brought or pursued in England arising out of or in connection with (i) or in any way related to any of the Security Documents or any assets subject thereto or (ii) any action of any kind whatsoever taken by any Bank pursuant thereto or which would, if brought by the Borrower against any Bank, have been required to be brought in the English courts;

	19.6.2	the Borrower shall not bring or pursue any Foreign Proceedings against any Bank and shall use its best endeavours to prevent persons not party to this Agreement from bringing or pursuing any Foreign Proceedings against any Bank;

	19.6.3	If, for any reason whatsoever, any Security Party and/or any person connected howsoever with any Security Party brings or pursues against any Bank any Foreign Proceedings, the Borrower shall indemnify such Bank on demand in respect of any and all claims, losses, damages, demands, causes of action, liabilities, costs and expenses (including, but not limited to, legal costs) of whatsoever nature howsoever arising from or in connection with such Foreign Proceedings which such Bank (or the Agent on its behalf)  certifies as having been incurred by it;

the Banks and the Borrower hereby agree and declare that the benefit of this clause 19 shall extend to and may be enforced by any officer, employee, agent or business associate of any of the Banks against whom the Borrower brings a claim in connection howsoever with any of the Security Documents or any assets subject thereto or any action of any kind whatsoever taken by, or on behalf of or for the purported benefit of any Bank pursuant thereto or which, if it were brought against any Bank, would fall within the material scope of clause 19.1.  In those circumstances this clause 19 shall be read and construed as if references to any Bank were references to such officer, employee, agent or business associate, as the case may be.

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Schedule 1

The Lenders and their Commitments

	
Name

	
Address and fax number

	
Original Commitment (USD)

	
Percentage of Total Commitment

	
NORDDEUTSCHE 

LANDESBANK 

GIROZENTRALE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

	
Lending Office

 

Friedrichswall 10

Hannover 30159

Germany

 

Address for Notices

 

Friedrichswall 10

Hannover 30159

Germany

 

Fax no:                          +49 511 361 4785

Attn:            Ship and Aircraft Finance Department, Christina Winkler

	
USD 16,560,000

	
100%

	 	
 Total Commitment

 

 

 

 

	
USD 16,560,000

	100%

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Schedule 2

Form of Drawdown Notice

	
To:

	
Norddeutsche Landesbank Girozentrale

Friedrichswall 10

Hannover 30159

Germany

(as Agent)

	 	 

[●]  February 2016

Dear Sirs

Facility agreement dated ____ February 2016 in respect of a loan of USD16,560,000 (the “Loan Agreement”) made between (1) Kamsarmax One Shipping Ltd as Borrower, (2) Norddeutsche Landesbank Girozentrale as Lenders, (3) Norddeutsche Landesbank Girozentrale as Agent and Security Trustee and (4) Norddeutsche Landesbank Girozentrale as Swap Bank.

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

We hereby give you notice that we wish to draw the sum of USD [                                                                                                                                                                          ] in respect of the Loan on [date] and select a first Interest Period in respect of such drawing of 6 months.

The funds should be credited to [name and number of account] with [details (including full name and SWIFT) of bank], via [details (including full name and SWIFT) of bank in New York City].

We confirm that:

(a)            no Default has occurred;

	(b)	the representations and warranties contained in clause 7 of the Loan Agreement are true and correct at the date hereof as if made with respect to the facts and circumstances existing at such date;

	(c)	the borrowing to be effected by the drawdown of the Loan will be within our corporate powers, has been validly authorised by appropriate corporate action and will not cause any limit on our borrowings (whether imposed by statute, regulation, agreement or otherwise howsoever) to be exceeded;

	(d)	there has been no material adverse change in our financial position or in the combined financial position of the Group from that described by us to the Banks or any of them in the negotiation of the Loan Agreement and/or in any documents or statements already delivered to the Agent in connection therewith;

	(e)	there are no Required Authorisations; and

	(f)	there are no Proceedings.

By            

Authorised Signatory

KAMSARMAX ONE SHIPPING LTD

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Schedule 3

 Conditions precedent

PART A

(referred to in clause 9.1.1)

	(a)	Corporate documents

Certified Copies of all documents which evidence or relate to the constitution of each Security Party and its current corporate existence;

	(b)	Corporate authorities

		(i)	Certified Copies of resolutions of the directors of each Security Party and, if required by the Agent, shareholders of the Borrower approving such of the Underlying Agreements and the Security Documents to which such Security Party is a party and authorising the execution and delivery thereof and performance of such Security Party’s obligations thereunder, additionally certified by an officer of such Security Party as having been duly passed at duly convened meetings of the directors and shareholders of such Security Party and not having been amended, modified or revoked and being in full force and effect; and

		(i)	originals or Certified Copies of any powers of attorney issued by any Security Party pursuant to such resolutions;

	(c)	Required Authorisations

A certificate signed by a director/officer/attorney-in-fact of the Borrower (dated no earlier than 5 Banking Days prior to the date of this Agreement) that there are no Required Authorisations or that there are no Required Authorisations except those described in such certificate which have been duly obtained and Certified Copies of which (including any conditions and/or documents ancillary thereto) are appended thereto.

	(d)	Certificate of incumbency

a list of directors and officers of each Security Party specifying the names and positions of such persons, certified (in a certificate dated no earlier than 5 Banking Days prior to the date of this Agreement) by an officer of such Security Party to be true, complete and up to date;

	(e)	Legal Ownership

evidence acceptable to the Agent confirming the legal ownership and control of the Borrower;

	(f)	Security Documents

the Corporate Guarantee, the Master Agreement, the Master Agreement Security Deed and the Shares Pledge duly executed and delivered, together with all documents required to be delivered pursuant thereto;

	(g)	Know-your-customer

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such information and documentation as the Banks may require in order to satisfy its “Know Your Customer” procedures;

 

	(h)	Marshall Islands opinion

an opinion of Messrs Poles, Tublin, Stratakis & Gonzalez LLP, special legal advisers to the Banks on the laws of the Marshall Islands;

	(i)	process agent

a letter from the Security Parties’ agent for receipt of service of proceedings accepting its appointment under each of the other Security Documents in which it is or is to be appointed as the relevant Security Party’s agent;

	(j)	Fees

evidence that the structuring fee due under clause 5.2, the administration fee due under clause 5.3 and (if applicable) the cancellation fee due under clause 5.4 have been paid;

	(k)	Underlying Documents

a Certified Copy of the Shipbuilding Contract, the MOA and the Required Charter;

PART B

(referred to in Clause 9.1.2)

	(a)	Fees and commissions

evidence that any fees and commissions due payable by the Borrower to any of the Banks pursuant to the terms of clause 5.1 or any other provision of the Security Documents have been paid in full;

	(b)	Valuation

a satisfactory, in the opinion of the Agent, valuation (at the cost of the Borrower) of the Vessel addressed to the Agent prepared in accordance with clause 8.2.2, dated no more than three weeks prior to the Drawdown Date;

	(c)	Equity

satisfactory, in the opinion of the Agent, evidence that the part purchase price not financed by the Loan payable under the MOA (a) prior to the Delivery Date, has been paid to the Seller and (b) on the Delivery Date, has been remitted (i) to the Seller or to the Builder or (ii) into the account number 001 – 1 – 337268 of the Agent with its US correspondent, JP Morgan Chase, for onwards remittance to the Seller or to the Builder, together with the Loan 3 Banking Days prior to the Delivery Date and to be held in a suspense account in the name of the Agent until the Release Date;

PART C

(referred to in Clause 9.1.3)

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	(a)	the Vessel

 

documentary evidence that the Vessel:

		(i)	Purchase

has been unconditionally delivered by the Builder to, and accepted by, the Seller under the Shipbuilding Contract and delivered by the Seller to, and accepted by, the Borrower under the MOA, and the full purchase price payable under the MOA (in addition to the part to be financed by the Loan) has been duly paid, together with copies of the builder’s certificate issued to the Seller, bill of sale issued by the Builder, protocol of delivery and acceptance signed by the Builder and the Seller, bill of sale issued by the Seller and protocol of delivery and acceptance signed by the Seller and the Borrower;

		(ii)	Registration and Encumbrances

is registered in the name of the Borrower through the Registry under the laws and flag of the Flag State and that the Vessel and her Earnings, Insurances and Requisition Compensation are free of Encumbrances except Permitted Encumbrances;

		(iii)	Classification

maintains the Classification free of any recommendations, qualifications or conditions of the Classification Society which have not been complied with in accordance with their terms (details of the Classification and Classification Society to be provided as soon as possible prior to the Delivery Date);

		(iv)	Insurance

is insured in accordance with the provisions of the Mortgage and all requirements of the Mortgage in respect of such insurance have been complied with (including without limitation, confirmation from the protection and indemnity association or other insurer with which the Vessel is, or is to be, entered for insurance or insured against protection and indemnity risks (including oil pollution risks) that any necessary declarations required by the association or insurer for the removal of any oil pollution exclusion have been made and that any such exclusion does not apply to the Vessel, together with a letter from the Borrower to such protection and indemnity association or other insurer irrevocably instructing the same to provide the Agent with a copy of the Certificate of Entry for the Vessel and any other information relating to the entry of the Vessel with such protection and indemnity association or other insurer), evidence of all insurances described in this paragraph to be provided as soon as possible prior to the Drawdown Date;

		(v)	Management

is managed by the Managers;

		(iv)	Charter

is, or immediately on delivery will be, employed under the Required Charter made between the Borrower and the Approved Charterer as charterer for a period of four years (plus/minus 30 days in the Approved Charterer’s option) plus one year (plus/minus 30 days in the Approved Charterer’s option) in the Approved Charterer’s option, starting

81

on the Delivery Date, and at a gross daily charterhire of USD14,100 for the first four years and USD14,350 for the optional year;

 

	(b)	Security Documents

the Mortgage, the General Assignment, the Charter Assignment in respect of the Required Charter, the Accounts Pledge duly executed by the Borrower and the Manager’s Undertakings in respect of the Vessel duly executed and delivered by the Managers and the Shares Pledge duly executed and delivered by the Corporate Guarantor, together with all documents required to be delivered pursuant thereto;

	(c)	Mortgage registration

evidence that the Mortgage in respect of the Vessel has been registered against the Vessel through the Registry under the laws and flag of her Flag State;

	(d)	Notices of assignment

copies of duly executed notices of assignment required by the terms of the Security Documents relating to the Vessel and in the forms prescribed by such Security Documents;

	(e)	Earnings Account/Retention Account/Drydock Reserve Account

evidence satisfactory to the Agent that the Earnings Account, the Retention Account and the Drydock Reserve Account have been duly opened with the Account Bank together with evidence that there is standing to the credit of the Earnings Account at least three hundred thousand Dollars (USD300,000);

	(f)	Underlying Documents

certified copies of the Shipbuilding Contract, the MOA, the Management Agreements and the Required Charter in all respects acceptable to the Agent;

	(g)	Marshall Islands opinion

an opinion of Messrs Poles, Tublin, Stratakis & Gonzalez LLP, special legal advisers to the Banks on the laws of the Marshall Islands;

	(h)	Flag State opinion

an opinion of special legal advisers to the Banks in relation to the Mortgage over the Vessel;

	(i)	Further opinions

any such further opinion as may be required by the Agent;

	(j)	DOC and Application for SMC

Certified Copies of the DOC, ISSC, (if applicable) IAPP and EIAPP Certificates in respect of the Vessel and a Certified Copy of the SMC therefor and evidence that the Vessel and the Technical Manager are in compliance with the ISM Code and the ISPS Code;

	(k)	Insurance opinion

82

an opinion (to be provided at Borrower’s expense) from Bankserve, on the insurances effected or to be effected in respect of the Vessel upon and following the Delivery Date;

 

	(l)	Fees and commissions

evidence that any fees and commissions due payable by the Borrower to any of the Banks pursuant to the terms of clause 5 or any other provision of the Security Documents have been paid in full.

83

Schedule 4

Form of Transfer Certificate

(referred to in clause 15.3)

TRANSFER CERTIFICATE

Lenders are advised not to employ Transfer Certificates or otherwise to assign or transfer interests in the Loan Agreement without further ensuring that the transaction complies with all applicable laws and regulations, including the Financial Services and Markets Act 2000 and regulations made thereunder and similar statutes which may be in force in other jurisdictions

To:            NORDDEUTSCHE LANDESBANK GIROZENTRALE as Agent on its own behalf and on behalf of the Borrower, the Lenders, the Agent, the Security Trustee and the Swap Bank as defined in the Loan Agreement referred to below.

[Date]

Attention:                          [●]

This certificate (“Transfer Certificate”) relates to a USD16,560,000 term loan credit facility agreement dated  February 2016  (the “Loan Agreement”) made between (1) Kamsarmax One Shipping Ltd as Borrower, (2) Norddeutsche Landesbank Girozentrale as Lenders, (3) Norddeutsche Landesbank Girozentrale as Agent and Security Trustee and (4) Norddeutsche Landesbank Girozentrale as Swap Bank. Words and expressions defined in the Loan Agreement shall, unless otherwise defined herein, have the same meanings when used in this Certificate.

In this Certificate:

the “Transferor” means [full name] of [lending office]; and

the “Transferee” means [full name] of [lending office].

	1.	The Transferor with full title guarantee assigns to the Transferee absolutely all rights and interests (present, future or contingent) which the Transferor has as a Lender under or by virtue of the Loan Agreement and all the other Security Documents in relation to [●] per centum ([●]%) of the [Contribution] [Commitment] of the Transferor (or its predecessors in title).

	2.	By virtue of this Transfer Certificate and clause 15 of the Loan Agreement, the Transferor is discharged [entirely from its [Contribution] [Commitment] in respect of the Loan, which amounts to USD [●]] [from [●] per centum ([●]%) of its [Contribution] [Commitment] in respect of the Loan and the Transferee assumes all obligations in respect thereof.

	3.	The Transferee hereby requests the Agent (on behalf of itself, the Borrower, the Security Trustee, the Swap Bank and the Lenders) to accept the executed copies of this Transfer Certificate as being delivered pursuant to and for the purposes of clause 15.3 of the Loan Agreement so as to take effect in accordance with the terms thereof on [date of transfer].

	4.	The Transferee:

            

84

	4.1	confirms that it has received a copy of the Loan Agreement and the other Security Documents together with such other documents and information as it has required in connection with the transaction contemplated thereby;

 

	4.2	confirms that it has not relied and will not hereafter rely on the Transferor, the Agent, the Agent, the Lenders or the Security Trustee to check or enquire on its behalf into the legality, validity, effectiveness, adequacy, accuracy or completeness of the Loan Agreement, any of the Security Documents or any such documents or information;

	4.3	agrees that it has not relied and will not rely on the Transferor or any of the Banks to assess or keep under review on its behalf the financial condition, creditworthiness, condition, affairs, status or nature of the Borrower, or any other Security Party (save as otherwise expressly provided therein);

	4.4	warrants that it has power and authority to become a party to the Loan Agreement and has taken all necessary action to authorise execution of this Transfer Certificate and to obtain all necessary approvals and consents to the assumption of its obligations under the Security Documents; and

	4.5	if not already a Lender, appoints (i) the Agent to act as its agent and (ii) the Security Trustee to act as its Security Trustee and trustee, as provided in the Security Documents and agrees to be bound by the terms of all of the Security Documents.

5.            The Transferor:

	5.1	warrants to the Transferee that it has full power to enter into this Transfer Certificate and has taken all corporate action necessary to authorise it to do so;

	5.2	warrants to the Transferee that this Transfer Certificate is binding on the Transferor under the laws of England, the country in which the Transferor is incorporated and the country in which its lending office is located; and

	5.3	agrees that it will, at its own expense, execute any documents which the Transferee reasonably requests for perfecting in any relevant jurisdiction the Transferee’s title under this Transfer Certificate or for a similar purpose.

	6.	The Transferee hereby undertakes with the Transferor and each of the other parties to each of the Security Documents that it will perform in accordance with its terms all those obligations which by the terms of the Loan Agreement and the other Security Documents will be assumed by it after delivery of the executed copies of this Transfer Certificate to the Agent and satisfaction of the conditions (if any) subject to which this Transfer Certificate is expressed to take effect.

	7.	By execution of this Transfer Certificate on their behalf by the Agent and in reliance upon the representations and warranties of the Transferee, the Borrower and each of the Banks accept the Transferee as a party to the Security Documents with respect to all those rights and/or obligations which by the terms of the Security Documents will be assumed by the Transferee (including without limitation those about pro-rata sharing and the exclusion of liability on the part of, and the indemnification of, the Agent, the Swap Bank, the Agent and the Security Trustee as provided by the Loan Agreement) after delivery of the executed copies of this Transfer Certificate to the Agent and satisfaction of the conditions (if any) subject to which this Transfer Certificate is expressed to take effect.

	8.	None of the Transferor or the Banks:

 

85

	8.1	makes any representation or warranty nor assumes any responsibility with respect to the legality, validity, effectiveness, adequacy or enforceability of any of the Security Documents or any document relating thereto; or

	8.2	assumes any responsibility for the financial condition of any Security Party or any party to any such other document or for the performance and observance by any Security Party or any party to any such other document (save as otherwise expressly provided therein) and any and all such conditions and warranties, whether express or implied by law or otherwise, are hereby excluded (except as aforesaid).

	9.	The Transferor and the Transferee each undertake that they will on demand fully indemnify the Agent in respect of any claim, proceeding, liability or expense which relates to or results from this Transfer Certificate or any matter concerned with or arising out of it unless caused by the Agent’s gross negligence or wilful misconduct, as the case may be.

	10.	The agreements and undertakings of the Transferee in this Transfer Certificate are given to and for the benefit of and made with each of the other parties to each of the Security Documents.

	11.	This Transfer Certificate shall be governed by, and construed in accordance with, English law.

	
Transferor

 

	
Transferee

	
By:___________________________________________

	
By:___________________________________________

	
 

Dated: ________________________________________

	
 

Dated: ________________________________________

 

Agent

Agreed for and on behalf of itself as Agent, the Borrower, the Security Trustee, the Swap Bank and the Lenders.

[●]

	
 

 

	
By:___________________________________________

	
 

Dated: ________________________________________

NOTE:                          The execution of this Transfer Certificate alone may not transfer a proportionate share of the Transferor’s interest in the security constituted by the Security Documents in the Transferor’s or Transferee’s jurisdiction.  It is the responsibility of the Transferee to ascertain whether any other documents are required to perfect a transfer of such a share in the Transferor’s interest in such security in any such jurisdiction and, if so, to seek appropriate advice and arrange for execution of the same.

 

86

The schedule

 

	
Contribution:

	
USD [●]

	
Commitment:

	
USD [●]

	
Portion Transferred:

	
[●]%

Administrative Details of Transferee

Name of Transferee:

Lending Office:

Contact Person:

(Loan Administration Department)

Telephone:

Telefax No:

Contact Person:

(Credit Administration Department)

Telephone:

Telefax No:

[Account for payments:]

87

Schedule 5

 Form of Trust Deed

THIS DECLARATION OF TRUST is made by NORDDEUTSCHE LANDESBANK GIROZENTRALE (the “Security Trustee”) on  February 2016 and is supplemental to (and made pursuant to the terms of) a USD16,560,000 facility agreement dated      February 2016 (the “Loan Agreement”) made between (1) Kamsarmax One Shipping Ltd as Borrower, (2) Norddeutsche Landesbank Girozentrale as Lenders, (3) Norddeutsche Landesbank Girozentrale as Agent and Security Trustee and (4) Norddeutsche Landesbank Girozentrale as Swap Bank. Words and expressions whose meanings are defined in the Loan Agreement shall have the same meanings when used in this Deed.

NOW THIS DEED WITNESSETH as follows:

	(a)	The Security Trustee hereby acknowledges and declares that, from the date of this Deed, it holds and shall hold the Trust Property on trust from time to time and at all times for the other Banks on the terms and basis set out in the Loan Agreement.

	(b)	The declaration and acknowledgement contained in paragraph 1 above shall be irrevocable.

IN WITNESS whereof the Security Trustee has executed this Deed the day and year first above written.

	
SIGNED, SEALED and DELIVERED

	
)

	 
	
as a DEED

	
)

	 
	
by

	
)

	 
	
for and on behalf of

	
)

	 ______________________________________
	
NORDDEUTSCHE LANDESBANK GIROZENTRALE

	
)

	
Attorney-in-fact

	
as Security Trustee

	
)

	 

88

Schedule 6

Form of Compliance Certificate

	
To:

	
Norddeutsche Landesbank Girozentrale (as Agent)

	
From:

	
Euroseas Ltd.

	 	 

Date [                          ] 200[  ]                     

Dear Sirs

Loan facility agreement dated [●] February 2016 (the “Loan Agreement”) for a loan of up to USD16,560,000 made between (1) Kamsarmax One Shipping Ltd  as Borrower, (2) Norddeutsche Landesbank Girozentrale as Lender, (3) Norddeutsche Landesbank Girozentrale as Agent and Security Trustee and (4) Norddeutsche Landesbank Girozentrale as Swap Bank.

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

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

	1.	all the Borrower’s financial covenants in the Loan Agreement set out in clause 8 are being fully complied with, and, in particular, by reference to the latest audited financial statements, management accounts and all other current relevant information available to us:

		(a)	the Net Worth of the Group is USD [         ];

		(b)	the Group maintains a market capitalisation of USD[];

		(c)	the Total Liabilities are USD [    ] and the Total Assets (adjusted for market values of vessels calculated in accordance with Clause 8.2.2) are USD [    ];

		(d)	the Total Liabilities divided by the Total Assets (adjusted for market values of vessels calculated in accordance with Clause 8.2.2) is [       ]%;

		(e)	the amount of cash or cash equivalents held in the Earnings Account is $[]; and

		(f)	the amount of cash or cash equivalents held in the Drydock Reserve Account is $[    ].

	2.	no Default has occurred

	3.	the representations set out in clause 7 of the Loan Agreement are true and accurate with reference to all facts and circumstances now existing and all Required Authorisations have been obtained and are in full force and effect.

[State any exceptions/qualifications to the above statements]

Yours faithfully

Euroseas Ltd.

By________________________                                                                                                  

Chief Financial Officer: Euroseas Ltd.                                                                                                                

89

Execution Page

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

	
SIGNED by STEFANIA KARMIRI

	
) /s/ Stefania Karmiri

	
 as a deed for and on behalf of

	
)

	
KAMSARMAX ONE SHIPPING LTD

	
)

	
(as Borrower under and pursuant to

	
)

	
a power of attorney dated 28 January 2016)

	
)

	
in the presence of

	
)

	
/s/ Ronan le du

Ince & Co

Akti Miaouli 47-49

Piraeus 185 36 Greece

	 

 

	
SIGNED  by ROBIN PARRY

	
)/s/ Robin Parry

	
for and on behalf of

	
)

	
NORDDEUTSCHE LANDESBANK GIROZENTRALE

	
)

	
(as a Lender) in the presence of

	
)

	
/s/ Ronan le du

Ince & Co

Akti Miaouli 47-49

Piraeus 185 36 Greece

	 

	
SIGNED  by ROBIN PARRY

	
)/s/ Robin Parry

	
for and on behalf of

	
)

	
NORDDEUTSCHE LANDESBANK GIROZENTRALE

	
)

	
(as Agent and Security Trustee)

	
)

	
in the presence of

	
)

	
/s/ Ronan le du

Ince & Co

Akti Miaouli 47-49

Piraeus 185 36 Greece

	 

 

	
SIGNED  by ROBIN PARRY

	
)/s/ Robin Parry

	
for and on behalf of

	
)

	
NORDDEUTSCHE LANDESBANK GIROZENTRALE

	
)

	
(as Swap Bank)

	
)

	
in the presence of

	 
	
/s/ Ronan le du

Ince & Co

Akti Miaouli 47-49

Piraeus 185 36 Greece

	 

 

90Exhibit 4.54

Date 12 February 2016

SAF-CONCORD SHIPPING LTD

ETERNITY SHIPPING COMPANY

ALLENDALE INVESTMENTS S.A.

MANOLIS SHIPPING LIMITED

ALTERWALL BUSINESS INC.

AGGELIKI SHIPPING LTD

as Borrowers

- and -

THE BANKS AND FINANCIAL INSTITUTIONS

listed in Schedule 1

as Lenders

- and -

EUROBANK ERGASIAS S.A.

as Arranger, Agent, Account Bank and Security Trustee

__________________________________

LOAN AGREEMENT

__________________________________

relating to a secured term loan

of up to US$14,500,000

DANIOLOS LAW FIRM

Alassia Building

13 Defteras Merarchias Street

185 35 Piraeus

Greece

INDEX

 

	
CLAUSE NO.

	
PAGE NO.

	
1

	
INTERPRETATION

	
2

	
2

	
FACILITY

	
18

	
3

	
POSITION OF THE LENDERS

	
19

	
4

	
DRAWDOWN

	
20

	
5

	
INTEREST

	
20

	
6

	
INTEREST PERIODS

	
22

	
7

	
DEFAULT INTEREST

	
23

	
8

	
REPAYMENT AND PREPAYMENT

	
24

	
9

	
CONDITIONS PRECEDENT

	
25

	
10

	
REPRESENTATIONS AND WARRANTIES

	
26

	
11

	
GENERAL UNDERTAKINGS

	
28

	
12

	
CORPORATE UNDERTAKINGS

	
32

	
13

	
INSURANCE

	
34

	
14

	
SHIP COVENANTS

	
38

	
15

	
SECURITY COVER

	
42

	
16

	
PAYMENTS AND CALCULATIONS

	
44

	
17

	
APPLICATION OF RECEIPTS

	
45

	
18

	
APPLICATION OF EARNINGS

	
46

	
19

	
EVENTS OF DEFAULT

	
48

	
20

	
FEES AND EXPENSES

	
52

	
21

	
INDEMNITIES

	
53

	
22

	
NO SET-OFF OR TAX DEDUCTION

	
55

	
23

	
ILLEGALITY, ETC

	
57

	
24

	
INCREASED COSTS

	
58

	
25

	
SET‐OFF

	
59

	
26

	
TRANSFERS AND CHANGES IN LENDING OFFICES

	
60

	
27

	
VARIATIONS AND WAIVERS

	
63

	
28

	
NOTICES

	
65

	
29

	
SUPPLEMENTAL

	
66

	
30

	
LAW AND JURISDICTION

	
67

	
SCHEDULE 1  LENDERS AND COMMITMENTS

	
68

	
SCHEDULE 2  DRAWDOWN NOTICE

	
69

	
SCHEDULE 3  CONDITION PRECEDENT DOCUMENTS

	
70

	
SCHEDULE 4  TRANSFER CERTIFICATE

	
73

	
SCHEDULE 5  FORM OF COMPLIANCE CERTIFICATE

	
77

	
EXECUTION PAGES

	
79

THIS LOAN AGREEMENT is made on 12 February 2016

BETWEEN:

	(1)	(a)	SAF-CONCORD SHIPPING LTD, being a company incorporated in accordance with  the laws of the Republic of Liberia whose registered office is situated at 80, Broad Street, Monrovia, Liberia (“Borrower A”)

(b)            ETERNITY SHIPPING COMPANY,  being a company incorporated in accordance with the laws of the Republic of the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960, Republic of Marshall Islands (“Borrower B”);

(c)            ALLENDALE INVESTMENTS S.A., a company incorporated in accordance with the laws of the Republic of Panama, whose registered office is at c/o Vives y Asociados, at Beatriz M. de Cabal Street, Banco Aliado Building, 8th Floor, Panama, Republic of Panama (“Borrower C”);

		(d)	MANOLIS SHIPPING LIMITED, a company duly incorporated in accordance with the laws of the Republic of the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960, Republic of Marshall Islands (the “Borrower D”);

		(e)	ALTERWALL BUSINESS INC., being a company incorporated in accordance with the laws of the Republic of Panama, whose registered office is at c/o Quijano y Asociates, Salbuda Building, top floor, East 53rd  Street, Urbanizacion Obarrio, P.O. BOX 7284, Panama 5, Panama (the “Borrower E”); and

		(f)	AGGELIKI SHIPPING LTD, being a company incorporated in accordance with  the laws of the Republic of Liberia whose registered office is situated at 80, Broad Street, Monrovia, Liberia (the “Borrower F”);

	(2)	THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1, as lenders (the “Lenders”);

	(3)	EUROBANK ERGASIAS S.A., a banking societé anonyme duly incorporated under the laws of Greece, having its registered office at 8, Othonos Street, Athens, Greece, acting for the purposes of this Agreement through its office at 83, Akti Miaouli, 185 38 Piraeus, Greece, as arranger (the “Arranger”);

	(4)	EUROBANK ERGASIAS S.A., a banking societé anonyme duly incorporated under the laws of Greece, having its registered office at 8, Othonos Street, Athens, Greece, acting for the purposes of this Agreement through its office at 83, Akti Miaouli, 185 38 Piraeus, Greece, as account bank (the “Account Bank”);

	(5)	EUROBANK ERGASIAS S.A., a banking societé anonyme duly incorporated under the laws of Greece, having its registered office at 8, Othonos Street, Athens, Greece, acting for the purposes of this Agreement through its office at 83, Akti Miaouli, 185 38 Piraeus, Greece, as agent (the “Agent”); and

1

	(6)	EUROBANK ERGASIAS S.A., a banking societé anonyme duly incorporated under the laws of Greece, having its registered office at 8, Othonos Street, Athens, Greece, acting for the purposes of this Agreement through its office at 83, Akti Miaouli, 185 38 Piraeus, Greece, as security trustee (the “Security Trustee”).

WHEREAS

The Lenders have agreed to make available to the Borrowers a secured term loan of up to the lesser of (a) US$14,500,000 and (b) 56% of the aggregate market value of the Ships, for the purpose of refinancing any and all outstanding indebtedness of the Borrowers and the Guarantor with the Lenders under the Existing Facilities remaining outstanding as at the date hereof and provide working capital to the Borrowers.

IT IS AGREED as follows:

	1	INTERPRETATION

	1.1	Definitions.  Subject to Clause 1.5, in this Agreement:

“Account Bank” means, in relation to any of the Cash Collateral Deposit Account, the Operating Account or the Retention Account, EUROBANK ERGASIAS S.A., acting through its Shipping Division at 83, Akti Miaouli, 185 38 Piraeus, Greece, or another bank or financial institution approved by the Agent at the request of the Borrowers;

“Accounting Information” means the annual audited accounts for the Guarantor to be provided to the Agent in accordance with Clause 11.6 (a) of this Agreement (as the context may require);

“Accounts Pledges” means, together, the deed or deeds of pledge creating security over the Operating Account, the Retention Account and the Cash Collateral Deposit Account, to be executed by Borrowers in favour of the Security Trustee, in such form as the Lenders may approve or require;

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

“Affiliate” means a subsidiary of that person or a parent company of that person or any other subsidiary of that parent company;

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

“Agent” means EUROBANK ERGASIAS S.A., having its registered office at 8, Othonos Street, Athens, Greece and acting through its office at 83, Akti Miaouli, 185 38 Piraeus, Greece or any successor of it appointed under clause 5 of the Agency and Trust Deed;

“Applicable Accounts” means, as at the date of calculation or, as the case may be, in respect of an accounting period, the annual audited consolidated accounts of the Guarantor, which the Borrowers are obliged to procure to be delivered to the Agent pursuant to Clause 11.6;

“Approved Manager” means Eurobulk Ltd. of the Republic of Liberia, established in Greece under law 89/67, 378/68, 27/75 and 814/78 as amended by law 2234/94 with a branch office in Greece at 4, Messogiou & Evropis Street, 151 24, Maroussi, Greece, or any other company appointed by the Borrowers with the prior written consent of the Agent (such consent not to be unreasonably withheld)  from time to time as the commercial, technical and operational manager of a Ship;

2

 

“Approved Manager’s Undertaking(s)-Assignment(s)” means, in relation to a Ship, a letter of undertaking executed or (as the context may require) to be executed by the Approved Manager in favour of the Security Trustee for that Ship in the terms reasonably required by the Security Trustee, agreeing certain matters in relation to the Approved Manager and subordinating the rights of the Approved Manager against that Ship and the relevant Borrower to the rights of the Creditor Parties under the Finance Documents and incorporating also a first priority assignment of all the rights which the Approved Manager may have in the Insurances relating to that Ship (other than the right to be reimbursed for P&I claims under the “pay and be paid” rule), in such form as the Agent, acting on the instructions of the Majority Lenders, may approve or require;

“Approved Flag” means the Republic of Liberia and/or the Republic of the Marshall Islands and/or the Republic of Panama or such other flag as the Agent may, in sole and absolute discretion, approve as the flag on which a Ship shall be registered;

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

“Arranger” means EUROBANK ERGASIAS S.A., having its registered office at 8, Othonos Street, Athens, Greece and acting through its office at 83, Akti Miaouli, 185 38 Piraeus, Greece;

“Assignment” or “Assignments” means a first priority deed of assignment of all Insurances, Earnings, Requisition Compensation as well as of any Charter Rights in respect of any Charter in relation to a Ship, to be executed by the relevant Borrower in favour of the Security Trustee, in form and substance satisfactory to the Agent (acting on the instructions of the Majority Lenders) and respective notices of assignment and acknowledgements thereof and an “Assignment” means any of them;

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

		(a)	the Latest Permissible Drawdown Date or such later date as the Lenders may agree with the Borrowers; or

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

“Borrowers” means each one of the Borrowers as specified in the beginning of this Agreement;

“Business Day”  means a day other that a Saturday or Sunday on which banks are open in New York, London, Athens, Piraeus, Cyprus, Luxembourg and, in respect of a day on which a payment is required to be made under a Finance Document, also in New York City;

3

 

“Capital Control Approval” means the approval of the competent authorities of Greece in accordance with the applicable regulations of the Bank of Greece and the legislation relating to capital controls and other economic measures imposed by the Government of Greece;

“Cash Collateral Deposit” means an interest bearing amount of United States Dollars two million eight hundred thousand (US$2,800,000) which is to be held during the Security Period as cash collateral to the Cash Collateral Deposit Account;

“Cash Collateral Deposit Account” means an account opened or to be opened with the Agent or the Security Trustee or (at the Borrowers’ option and subject to the satisfaction of the Agent’s relevant reasonable requirements) with any of their affiliates outside Greece, in Cyprus or Luxembourg in the name of the Guarantor where the Cash Collateral Deposit is to be maintained during the Security Period;

“Charter” means any charter or other contract of employment of more than twelve months’ duration in respect of a Ship acceptable to the Agent;

"Charterer" in respect of any Charter, means a first class charterer in the opinion of the Agent and acceptable to the Agent in its discretion, the Agent’s approval not to be unreasonably withheld;

"Charter Rights" in respect of a Ship, means all rights and benefits accruing to the relevant Borrower under or arising out of the relevant Charter and not forming part of the Earnings;

“Code” means the United States Internal Revenue Code of 1986 (as amended);

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

“Commitment Letter” means the Commitment Letter dated 23rd December, 2015 addressed by the Bank to the Corporate Guarantor and duly accepted by the Borrowers and the Corporate Guarantors on 24 December 2015;

“Compliance Certificate” means a certificate referring to a compliance date in the form set out in Schedule 5 (or in any other form which the Agent approves) to be provided together with the financial accounts provided in accordance with Clauses 11.6 and 12.8;

“Compliance Date” means 31 December of each calendar year (or such other dates as the Agent may agree pursuant to Clause 12.8);

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

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

4

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

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

“Drawdown Date” means the date, being a Business Day falling not later than the Latest Permissible Drawdown Date requested by the Borrowers for the Loan to be made, or (as the context requires) the date on which the Loan is actually made;

“Drawdown Notice” means a notice in the form set out in Schedule 2 (or in any other form which the Agent approves or reasonably requires);

“Earnings” means all moneys whatsoever which are now, or later become, payable (actually or contingently) to the owner of a Ship or (as the case may be) to the Security Trustee pursuant to the Assignment in connection with that Ship and which arise out of the use or operation of that Ship, including (but not limited to):

		(a)	all freight, hire and passage moneys, compensation payable to the owner of a Ship or (as the case may be) to the Security Trustee pursuant to the Assignment in connection with that Ship in the event of requisition of that Ship for hire, remuneration for salvage and towage services, demurrage and detention moneys and damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of that Ship;

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

		(c)	contributions of any nature whatsoever in respect of general average; and

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

“Environmental Claim” means:

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

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

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

 

“Environmental Incident” means:

		(a)	any release of Environmentally Sensitive Material from a Ship; or

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

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

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

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

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

“Existing Facilities” means:

(a)            a term loan facility in the amount of (originally) Ten Million United States Dollars (US$10,000,000) granted by the Lender under its former name EFG Eurobank Ergasias S.A. to Borrower A, as borrower, pursuant to the Existing Facility Agreement A, out of which the principal amount remaining outstanding on the date of the Commitment Letter was three million two hundred fifty thousand United States Dollars (US$3,250,000) and following repayment in full of such amount on 15 January 2016, currently is zero (nil);

(b)            a term loan facility in the amount of (originally) Eight Million United States Dollars (US$8,000,000) granted by the Lender to the Guarantor, as borrower, pursuant to the Existing Facility Agreement B, out of which the principal amount remaining currently outstanding is five million three hundred seventy five thousand United States Dollars (US$5,375,000); and

(c)            a term loan facility in the amount of (originally) Five Million United States Dollars (US$5,000,000) granted by the Lender to (inter alia) Borrower D and Borrowers E, as borrowers, pursuant to the Existing Facility Agreement C, out of which the principal amount remaining currently outstanding is four million five hundred thousand United States Dollars (US$4,500,000)

and "Existing Facility" means any of them;

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“Existing Facility Agreements” means:

(a)            a term loan facility agreement dated 9th January 2009 made between Borrower A and the Lender under its former name EFG Eurobank Ergasias S.A., made between Borrower A as borrower, and the Lender under its former name EFG Eurobank Ergasias S.A., as same has been thereafter assigned to Eurobank EFG Private Bank Luxembourg SA (now called Eurobank Private Bank Luxembourg SA) (the “Assignee”) pursuant to an assignment agreement dated 29th July 2011, as amended by an amendment agreement dated 29th November 2011 (together, “Assignment Agreement”), made between the Lender under its former name EFG Eurobank Ergasias S.A. as assignor and the Assignee, and as furthermore same has been amended by a first supplemental agreement dated 29 October 2012 made (inter alia) between Borrower A and the Assignee (“Existing Facility Agreement A”);

(b)            a term loan facility agreement dated 3 February 2014 made between the Guarantor as borrower and the Lender listed in Schedule (“Existing Facility Agreement B”); and

(c)            a term loan facility agreement dated 10 June 2015 made between (inter alia)  Borrower D and Borrowers E and the Lender listed in Schedule (“Existing Facility Agreement C”),

and "Existing Facility Agreement" means any of them;

“FATCA” means:

		(a)	sections 1471 to 1474 of the Code or any associated regulations or other official guidance;

		(b)	any treaty, law, regulation or other official guidance enacted in any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of paragraph (a) above; or

		(c)	any agreement pursuant to the implementation of paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction;

“FATCA Application Date” means:

		(a)	in relation to a "withholdable payment" described in section 1473(1)(A)(i) of the Code (which relates to payments of interest and certain other payments from sources within the US), 1 January 2014;

		(b)	in relation to a "withholdable payment" described in section 1473(1)(A)(ii) of the Code (which relates to "gross proceeds" from the disposition of property of a type that can produce interest from sources within the US), 1 January 2017; or

		(c)	in relation to a "passthru payment" described in section 1471(d)(7) of the Code not falling within paragraphs (a) or (b) above, 1 January 2017,

 

or, in each case, such other date from which such payment may become subject to a deduction or withholding required by FATCA as a result of any change in FATCA after the date of this Agreement;

“FATCA Deduction” means a deduction or withholding from a payment under a Finance Document required by FATCA;

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“FATCA Exempt Party” means a Party that is entitled to receive payments free from any FATCA Deduction;

“FATCA FFI” means a foreign financial institution as defined in section 1471(d)(4) of the Code which, if any Creditor Party is not a FATCA Exempt Party, could be required to make a FATCA Deduction;

“FATCA Non-Exempt Lender” means any Lender who is not a FATCA Exempt Party;

“FATCA Protected Lender” means any Lender irrevocably designated as a "FATCA Protected Lender" by the Borrowers by notice to that Lender and the Agent at least six months prior to the earliest FATCA Application Date for a payment by a Party to that Lender (or to the Agent for the account of that Lender);

“Final Maturity Date” means in respect of the Loan the date falling thirty six (36) months after the Drawdown Date of the Commitment but no later than February 28th, 2019;

“Finance Documents” means:

		(a)	this Agreement;

		(b)	the Drawdown Notice;

		(c)	the Agency and Trust Deed;

		(d)	the Guarantee;

		(e)	the Mortgages;

		(f)	the Assignments;

		(g)	the Accounts Pledges;

		(h)	the Approved Manager’s Undertakings;

		(i)	the Guarantor’s Undertaking(s)-Assignments; and

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

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

 

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

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

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

 

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

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

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

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

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

“Group” means the Guarantor and its subsidiaries (including the Borrowers);

"Guarantee" means the guarantee and indemnity given or, as the context may require, to be given by the Guarantor in form and substance satisfactory to the Agent, as security for the Secured Liabilities and any and all obligations of the Borrowers under this Agreement;

“Guarantor” means EUROSEAS LTD. being a company incorporated in accordance with the laws of the Republic of the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 or any other legal entity nominated by the Borrowers and accepted by the Agent which have, or as the context may require, shall or may at any time guarantee the obligations of the Borrowers under this Agreement and/or those of the other Security Parties to the Lenders and/or any other Creditor Party;

“Guarantor’s Undertaking(s)-Assignment(s)” means, in relation to a Ship, an undertaking to the Security Trustee in respect of that Ship executed or (as the context may require) to be executed by the Guarantor, being nominated as co-assured in the insurance policies for that Ship whereby the Guarantor would undertake throughout the Security Period, to subordinate any and all claims it may have against the relevant Borrower and/or that Ship to the claims of the Lenders under the Loan Agreement and the Security Documents and would incorporate also a first priority assignment of all the rights which the Guarantor may have in the Insurances relating to that Ship (other than the right to be reimbursed for P&I claims under the “pay and be paid” rule);

		“Insurances” means:

		(a)	all policies and contracts of insurance, including entries of a Ship in any protection and indemnity or war risks association, which are effected in respect of that Ship; and

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

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

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“ISM Code” means the International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organisation Assembly as Resolutions A.741 (18) (as amended by MSC 104 (73)) and A.913(22) (superseding Resolution A.788(19)), as the same may be amended, supplemented or superseded from time to time (and the terms “safety management system”, “Safety Management Certificate” and “Document of Compliance” have the same meanings as are given to them in the ISM Code);

“ISPS Code” means the International Ship and Port Facility Security Code adopted by the International Maritime Organisation (as the same may be amended, supplemented or superseded from time to time);

“ISSC” means a valid and current International Ship Security Certificate issued under the ISPS Code;

“Latest Permissible Drawdown Date” means the 28th February 2016 being the latest date for drawdown of the Loan pursuant to Clause 2 hereof or such later date as the Lenders may agree in writing;

“Lender” means, subject to Clause 26.6:

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

		(b)	the holder for the time being of a valid Transfer Certificate;

“LIBOR” means, in relation to any amount and for any period, the offered rate (if any) for deposits of United States Dollars for such amount and for the period which is:

		(a)	the London interbank offered rate administrated by ICE Benchmark Administration Limited (or if ICE Benchmark Administration Limited ceases to act in the role of administrating and publishing LIBOR rates, the equivalent rate published by a subsequently appointed administrator of LIBOR) for United States Dollars for the relevant period displayed on the appropriate page of the Reuters screen at or about 11:00 a.m. (London time) on the Quotation Date for such period (and if the agreed page is replaced or service ceases to be available, the Agent may specify another page or service displaying the appropriate rate after consultation with the Borrowers); or

		(b)	if on such date no such rate is displayed, the arithmetic mean of the rates (rounded upwards to the nearest 1/16th of one per cent) quoted to the Agent as the rate for deposits of United States Dollars in an amount comparable to the amount in relation to which LIBOR is to be determined and for a period equivalent to the relevant period offered by the Agent to prime banks in the London Interbank Market at or about 11:00 a.m. (London time) on the Quotation Date for such period,

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provided however that if the rate determined pursuant to paragraph (a) or paragraph (b) above is lower than zero (0), then LIBOR shall be zero (0);“Loan” means the principal amount for the time being outstanding under this Agreement;

“Major Casualty” means any casualty to a Ship in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $300,000 or the equivalent in any other currency;

“Majority Lenders” means:

		(a)	before the Loan has been made, Lenders whose Commitments are equal to or greater than 66 2⁄3 per cent. of the Total Commitments; and

		(b)	after the Loan has been made, Lenders whose Contributions are equal to or greater than 66 2⁄3 per cent. of the Loan;

“Mandatory Costs” shall have the meaning given to it in Clause 21.8;

“Margin” means six per cent (6%) per annum;

“Market Value” means the market value of a Ship determined prior to the Drawdown Date and at least once a year by one separate, independent and reputable first class sale and purchase broker, appointed by and reporting to the Agent certifying the market value such Ship on the basis of the value of that Ship charter free at the expense of the Borrowers in accordance with Clause 15.4 and 15.9 hereof; 

“Material Adverse Effect” means, in the reasonable opinion of the Majority Lenders, a material adverse effect on the Borrowers’ ability to meet their obligations under any of the Finance Documents;

“Material Adverse Change” means any event or series of events which, in the reasonable opinion of the Majority Lenders, has or will have a Material Adverse Effect;

“Mortgage” or “Mortgages” means the first priority ship mortgage on each of the Ships to be executed by the relevant Borrower in favour of the Security Trustee under the Approved Flag (and deed of covenant collateral thereto if applicable), in such form as the Security Agent may approve or require, as the same may from time to time be amended and/or supplemented;

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

“Net Worth” means the value of the total assets of the Guarantor minus total liabilities, as expressed in its financial statements;

 

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

“Operating Account” means an account in the name of each Borrower with the Agent or the Security Trustee, or any other account (with that or another office of the Agent in Cyprus or Luxembourg) which is designated by the Agent, following consultation with the Borrowers and the Guarantor, as the Operating Account for the purposes of this Agreement;

“Participating Member State” means any member state of the European Union that has the euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union;

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“Party” means a party to this Agreement or a Finance Document;

“PATRIOT Act” means the United States Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Improvement and Reauthorization Act of 2005 (H.R. 3199);

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

“Permitted Security Interests” means:

		(a)	Security Interests created by the Finance Documents;

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

		(c)	liens for salvage;

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

		(e)	liens for master’s disbursements incurred in the ordinary course of trading and any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of a Ship, provided such liens do not secure amounts more than 30 days overdue (unless the overdue amount is being contested by the owner of such Ship in good faith by appropriate steps) and subject, in the case of liens for repair or maintenance, to Clause 14.12(h);

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

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

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

		(a)	England and Wales;

 

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

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

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

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

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

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

“Quotation Date” means, in relation to any Interest Period (or any other period for which an interest rate is to be determined under any provision of a Finance Document), the day on which quotations would ordinarily be given by leading banks in the London Interbank Market for deposits in the currency in relation to which such rate is to be determined for delivery on the first day of that Interest Period or other period;

“Repayment Date” means a date on which a repayment is required to be made under Clause 8;

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

“Retention Account” means an interest bearing account in the name of the Borrowers with the Agent or the Security Trustee, or any other account (with that or another office of the Agent in Cyprus or Luxembourg) which is designated by the Agent as the Retention Account following consultation with the Borrowers and the Guarantor for the purposes of this Agreement;

“Restricted Person” means a person with whom transactions are currently prohibited or restricted under any Sanctions List or any worldwide sanctions (both as applicable to any Security Party) or is otherwise the target of Sanctions;

“Sanctions” means any economic sanctions laws, regulations, embargoes or restrictive measures applicable to any Security Party that are administered, enacted or enforced by:

(a)            the United States government;

 

(b)            the United Nations;

		(c)	the European Union or any of its Member States, including without limitation, the United Kingdom;

		(d)	any country to which any Borrower, or any other member of the Group is bound; or

		(e)	the respective governmental institutions and agencies of any of the foregoing, including without limitation, the Office of Foreign Assets Control of the US Department of Treasury (OFAC), the United States Department of State and Her Majesty’s Treasury (HMT) (together Sanctions Authorities);

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“Sanctions List” means the “Specially Designated Nationals and Blocked Persons” list issued by OFAC, the “Consolidated List of Financial Sanctions Targets and Investment Ban List” issued by HMT, or any similar list issued or maintained or made public by any of the Sanctions Authorities as applicable to any Security Party;

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

“Security Interest” means:

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

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

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

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

“Security Period” means the period commencing on the date of this Agreement and ending on such date as all obligations whatsoever of all of the Security Parties under or pursuant to the Finance Documents whensoever arising have been irrevocably paid, performed and/or complied with;

 

“Security Trustee” means EUROBANK ERGASIAS S.A., having its registered office at 8, Othonos Street, Athens, Greece and acting through its office at 83, Akti Miaouli, 185 38 Piraeus, Greece or any successor of it appointed under clause 5 of the Agency and Trust Deed;

“Ships” means:

		(a)	the m.v. “MONICA P.”, built in 1998, being of 27,011 tons gross, 16,011 tons net, currently registered under the flag of the Republic of Liberia with Official Number 10909 in the name of Borrower A (“Ship A”);

		(b)	the m.v. “CAPTAIN COSTAS” built in 1992, being of 21053 gross tons registered under the Marshall Islands flag with Official Number 2892 in the ownership of Borrower B (“Ship B”);

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		(c)	the m.v. “KUO HSIUNG”, built in 1993, being of 15183 gross tons registered under the Panama flag with IMO 9055448 in the ownership of Borrower C (“Ship C”);

		(d)	the m.v. “MANOLIS P.” built in 1995, being of 14962 tons gross, 7579 tons net, currently registered under the flag of the Republic of the Marshall Islands with Official Number 2849  in the name of Borrower D (“Ship D”);

		(e)	the m.v. “NINOS”, built in 1990, being of 15122 gross tons and of 6244 net tons currently registered under the Panama flag with IMO N 8909082 in the ownership of Borrower E  (“Ship E”);

		(f)	the m.v. “AGGELIKI P.” built in 1998, being of 23,809 tons gross, 10474 tons net, currently registered under the flag of the Republic of Liberia with Official Number 14698 in the name of Borrower F (“Ship F”);

and a “Ship” means any of them;

“Total Loss” means:

		(a)	actual, constructive, compromised, agreed or arranged total loss of a Ship;

		(b)	any expropriation, confiscation, requisition or acquisition of a Ship, whether for full consideration, a consideration less than her proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority, excluding a requisition for hire unless it is within 40 days redelivered to the full control of such Ship’s owner;

		(c)	any arrest, capture, seizure or detention of a Ship (including any hijacking or theft) unless she is within 40 days redelivered to the full control of such Ship’s owner;

“Total Loss Date” means:

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

 

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

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

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

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

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

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

“US Tax Obligor” means:

		(a)	a Party which is resident for tax purposes in the United States of America; or

		(b)	a Party some or all of whose payments under the Finance Documents are from sources within the United States for US Federal income tax purposes.

	1.2	Construction of certain terms.  In this Agreement:

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

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

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

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

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

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

“excess risks”  means the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of a Ship in consequence of her insured value being less than the value at which that Ship is assessed for the purpose of such claims;

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

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

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

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

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

“obligatory insurances”  means all insurances effected, or which a Borrower is obliged to effect, under Clause 13 below or any other provision of this Agreement or another Finance Document;

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

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

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

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

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

“subsidiary”  has the meaning given in Clause 1.4;

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

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

 

“war risks” includes the risk of mines and all risks excluded by clause 23 of the Institute Time Clauses (Hulls) (1/10/83) or clause 24 of the Institute Time Clauses (Hulls) (1/11/1995).

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

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

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

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

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

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

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

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

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

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

	1.5	General Interpretation.

	(a)	In this Agreement:

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

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

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

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

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

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

	1.6	Event of Default.  A Potential Event of Default and/or an Event of Default) are “continuing” if either of them has not been remedied or waived.

	2	FACILITY

	2.1	Amount of facility.  Subject to the satisfaction of all conditions precedent and in reliance on the representations and warranties made in or in accordance with them and furthermore subject to Capital Control Approval and the other provisions of this Agreement, the Lenders shall make available to the Borrowers a secured term loan in one advance not exceeding the lesser of (a) $14,500,000 and (b) 56% of the aggregate market value of the Ships as at the Drawdown Date.

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

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	2.3	Purpose of Loan.  The Borrowers undertake with each Creditor Party to use the Loan only for the purpose stated in the preamble to this Agreement.

	3	POSITION OF THE LENDERS

	3.1	Interests of Lenders several.  The rights of the Lenders under this Agreement (but without prejudice to the provisions of this Agreement relating to or requiring action by the Majority Lenders) are several; accordingly each Lender shall have the right to protect and enforce its rights arising out of this Agreement and it shall not be necessary for any other Lender and/or any other Creditor Party to be joined as an additional party in any proceedings for this purpose.

	3.2	Independent action by a Lender.  None of the Lenders shall enforce, exercise any rights, remedies or powers or grant any consents or releases under or pursuant to, or otherwise have a direct recourse to the security and/or guarantees constituted by any of the Finance Documents without the prior written consent of the Majority Lenders but, provided such consent has been obtained, it shall not be necessary for any other Lender to be joined as an additional party in any proceedings for this purpose.

	3.3	Obligations of Lenders several.  The obligations of the Lenders under this Agreement are several; and a failure of a Lender to perform its obligations under this Agreement to which it is a party shall not result in:

	(a)	the obligations of the other Lenders being increased; nor

	(b)	the Borrowers, any Security Party, any other Lender being discharged (in whole or in part) from its obligations under any Finance Document,

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

	3.4	Parties bound by certain actions of Majority Lenders.  Every Lender and any other Creditor Party, the Borrowers and each Security Party shall be bound by:

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

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

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

	3.5	Reliance on action of Agent.  The Borrowers and each Security Party shall be entitled to assume that the Majority Lenders have duly given any instruction or authorisation which, under any provision of a Finance Document, is required in relation to any action which the Agent has taken or is about to take.

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

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	4	DRAWDOWN

	4.1	Request for Loan.  Subject to the following conditions, the Borrowers may request the Loan to be made by ensuring that the Agent receives a completed Drawdown Notice not later than 10.00 a.m. (London time) 3 Business Days prior to the intended Drawdown Date.

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

	(a)	the Drawdown Date has to be a Business Day during the Latest Permissible Drawdown Date;

	(b)	the amount of the Loan shall not exceed the lesser of (i) $14,500,000 and (ii) 56% of the aggregate market value of the Ships as at the Drawdown Date; and

	(c)	the Borrowers have complied with the provisions of Clause 9.1 with respect to the Loan.

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

	(a)	the amount of the Loan and the Drawdown Date;

	(b)	the amount of that Lender's participation in the Loan; and

	(c)	the duration of the first Interest Period.

	4.4	Drawdown Notice irrevocable.  The Drawdown Notice must be signed by a director or other authorised person of the Borrowers; and once served, the Drawdown Notice cannot be revoked without the prior consent of the Agent, acting on the authority of the Majority Lenders.

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

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

	(a)	to the account which the Borrowers specify in the Drawdown Notice; and

	(b)	in the same funds as the Agent received the payments from the Lenders.

	4.7	Disbursement of Loan to third party.   The payment by the Agent under Clause 4.6 shall constitute the making of the Loan and the Borrowers shall thereupon become indebted, as principal and direct obligors, to each Lender in an amount equal to that Lender's Contribution.

	5	INTEREST

	5.1	Payment of normal interest.  Subject to the provisions of this Agreement, interest on the Loan in respect of each Interest Period shall be paid by the Borrowers on the last day of that Interest Period.

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	5.2	Normal rate of interest.  Subject to the provisions of this Agreement, the rate of interest on the Loan in respect of an Interest Period shall be the aggregate of the Margin and LIBOR for that Interest Period.

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

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

	(a)	each rate of interest; and

	(b)	the duration of each Interest Period;

as soon as reasonably practicable after each is determined.

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

	(a)	at least one Business Day before the start of an Interest Period, Lenders having Contributions together amounting to more than 40 per cent. of the Loan (or, if the Loan has not been made, Commitments amounting to more than 40 per cent. of the Total Commitments) notify the Agent that LIBOR fixed by the Agent would not accurately reflect the cost to those Lenders of funding their respective Contributions (or any part of them) during the Interest Period in the London Interbank Dollar Market at or about 11.00 a.m. (London time) on the second Business Day before the commencement of the Interest Period (provided always that any such notifications by any such Lenders shall be duly substantiated); or

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

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

	
5.7

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

	(a)	in a case falling within paragraph (a) of Clause 5.5, the Lenders' obligations to make the Loan;

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

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

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

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

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

	5.11	Notice of prepayment.  If the Borrowers do not agree with an interest rate set by the Agent under Clause 5.10, the Borrowers may give the Agent not less than 15 Business Days' notice of their intention to prepay the Loan at the end of the interest period set by the Agent.

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

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

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

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

	6	INTEREST PERIODS

	6.1	Commencement of Interest Periods. The first Interest Period shall commence on the Drawdown Date and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period.

	6.2	Duration of normal Interest Periods.  Subject to Clauses 6.3 and 6.4, each Interest Period shall be:

	(a)	3, 6, or 9 months as notified by the Borrowers to the Agent not later than 11.00 am (London time) 3 Business Days before the commencement of the Interest Period; or

	(b)	3 months, if the Borrowers fail to notify the Agent by the time specified in paragraph (a); or

	(c)	such other period as the Agent may, with the Majority Lenders' authority, agree with the Borrowers.

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	6.3	Duration of Interest Periods for repayment instalments.  In respect of an amount due to be repaid under Clause 8 on a particular Repayment Date, an Interest Period shall end on that Repayment Date. No Interest Period shall extend beyond the final Repayment Date.

	6.4	Non-availability of matching deposits for Interest Period selected.  If, after the Borrowers have selected and the Lenders have agreed to an Interest Period, any Lender notifies the Agent by 10:00 a.m. (London time) on the second Business Day before the commencement of the Interest Period that it is not satisfied that deposits in Dollars for a period equal to the Interest Period will be available to it in the London Interbank Market when the Interest Period commences, then that Interest Period shall have such duration as the Agent after having consulted with the Borrowers may determine.

	7	DEFAULT INTEREST

	7.1	Payment of default interest on overdue amounts.  The Borrowers shall pay interest in accordance with the following provisions of this Clause 7 on any amount payable by the Borrowers under any Finance Document which the Agent, the Security Trustee or any other Creditor Party does not receive on or before the relevant due date for payment thereunder, that is:

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

	(b)	if a Finance Document provides that such amount is payable on demand, three (3) days following the date on which the demand is served; or

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

	7.2	Default rate of interest and its calculation.  Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Agent to be two point fifty per cent (2.50%) 

per annum above the Margin plus, in respect of successive periods of any duration (including at call) up to 3 months which the Agent may select from time to time:

		(i)	LIBOR; or

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

	7.3	Notification of interest periods and default rates.  The Agent shall promptly notify the Lenders and the Borrowers of each interest rate determined by the Agent under Clause 7.2 and of each period selected by the Agent for the purposes of that Clause; but this shall not be taken to imply that the Borrowers are liable to pay such interest only with effect from the date of the Agent's notification.

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

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

	8	REPAYMENT AND PREPAYMENT

	8.1	Amount of repayment instalments.  The Borrowers shall repay the Loan by twelve (12) consecutive quarterly instalments, each of which shall be in the amount of Four hundred and sixty thousand Dollars ($460,000) and by a balloon payment of Eight million nine hundred and eighty thousand Dollars ($8,980,000).

	8.2	Repayment Dates.  The first instalment shall be repaid on the date falling three (3) months after the Drawdown Date, each subsequent instalment shall be repaid at three monthly intervals thereafter and the balloon payment shall be repaid concurrently with the twelfth and final repayment instalment, which shall be repaid on the date falling on the earlier of (i) the third annual anniversary of the Drawdown Date and (ii) the Final Maturity Date.

Provided always that if the amount of the Loan drawn down hereunder is less than $14,500,000 then the amount of the repayment instalments and of the balloon payment shall be reduced on a pro rata basis.

	8.3	Final Repayment Date.  On the final Repayment Date, the Borrowers shall additionally pay to the Lenders all other sums then accrued or owing under any Finance Document.

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

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

	(a)	a partial prepayment shall be in the minimum amount of Two hundred fifty thousand Dollars ($250,000) or a multiple thereof;

	(b)	the Agent has received from the Borrowers at least ten (10) Business Days prior written confirmative and irrevocable notice specifying the amount to be prepaid and the date on which the prepayment is to be made (such date shall be the last day of an Interest Period); and

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

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

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

	8.8	Mandatory prepayment.  Upon sale or Total Loss of any of the Ships, following the application of the relevant proceeds, the Loan outstanding will be reduced pro rata and for the avoidance of any doubt, any amount so applied shall be used to reduce the outstanding Repayment Instalments and the balloon payment on a pro rata basis.

	8.9	Amounts payable on prepayment.  A prepayment shall be made together with accrued interest (and any other amount payable under Clause 21 below or otherwise) in respect of the Loan and, if the prepayment is not made on the last day of an Interest Period, together with any sums payable under Clause 21.2 but without premium or penalty).

	8.10	Application of partial prepayment.  Each partial prepayment shall be applied against the repayment instalments specified in Clause 8.1 (including the balloon payment) on a pro rata basis.

	8.11	No reborrowing.  No amount prepaid or repaid may be re-borrowed.

	9	CONDITIONS PRECEDENT

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

	(a)	that, on or before the date of signing of this Agreement, the Agent receives the documents described in Part A of Schedule 3 in form and substance satisfactory to the Agent and its lawyers;

	(b)	that, on or before the date of drawdown of the Loan, the Lender receives the documents described in Part B in Schedule 3 in form and substance satisfactory to the Agent and its lawyers;

	(c)	that, on or before the service of the Drawdown Notice, the Agent receives the relevant fees payable pursuant to Clause 20.1 and has received payment of the expenses referred to in Clause 20.2;

	(d)	that at the date of the Drawdown Notice, at the Drawdown Date on the first day of each Interest Period and on the date of each Compliance Certificate:

		(i)	no Event of Default or Potential Event of Default has occurred and is continuing or would result from the borrowing of the Loan;

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

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

		(iv)	there has not been a Material Adverse Change in the financial positon or state of affairs of the Borrowers from that disclosed to the Agent prior to the date of this Agreement;

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

	(f)	that the Agent has received, and found to be acceptable to it, any further opinions, consents, agreements and documents in connection with the Finance Documents which the Agent (acting reasonably)_may, with the authorisation of the Majority Lenders, request by notice to the Borrowers prior to the Drawdown Date.

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

	10	REPRESENTATIONS AND WARRANTIES

	10.1	General.  The Borrowers represent and warrant to each Creditor Party as follows:

	10.2	Status.  Each Borrower is duly incorporated and validly existing and in good standing under the laws of its country of incorporation; neither the Borrowers nor any Security Party is a FATCA FFI or a US Tax Obligor.

	10.3	Share capital and ownership.  Each Borrower incorporated in Liberia and/or in the Marshall Islands has an authorised share capital divided into 500 registered and/or bearer shares and each Borrower incorporated in the Republic of Panama has an authorised share capital divided into 100 shares and the legal title and ownership of all those shares is held, free of any Security Interest or other claim, by the Guarantor.

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

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

	(b)	to borrow under this Agreement and to make all the payments contemplated by, and to comply with, the Finance Documents to which each Borrower is a Party.

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

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

	(a)	constitute that Borrower's legal, valid and binding obligations enforceable against that Borrower in accordance with their respective terms; and

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

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

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

	(a)	the Borrowers will have the right to create all the Security Interests which that Finance Document purports to create; and

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

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

	(a)	any law or regulation in any Pertinent Jurisdiction; or

	(b)	the constitutional documents of the Borrowers; or

	(c)	any contractual or other obligation or restriction which is binding on the Borrowers or any of its assets, and will not have a Material Adverse Effect.

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

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

	10.11	Information.  All information which has been provided in writing by or on behalf of the Borrowers or any Security Party to any Creditor Party in connection with any Finance Document satisfied the requirements of Clause 11.6; all audited and consolidated accounts which have been so provided satisfied the requirements of Clause 11.7; and there has been no Material Adverse Change in the financial position or state of affairs of the Borrowers from that disclosed in the latest of those accounts which constitutes a Material Adverse Effect.

	10.12	No litigation.  No legal or administrative action involving the Borrowers or any Security Party (including action relating to any alleged or actual breach of the ISM Code or the ISPS Code) has been commenced or taken or, to the Borrowers’ knowledge, is likely to be commenced or taken which, in either case and if determined adversely, would be likely to have a Material Adverse Effect.

	10.13	Compliance with certain undertakings.  At the date of this Agreement, the Borrowers are in compliance with Clauses 11.2, 11.5, 11.9, 11.11 and 11.17.

	10.14	Taxes paid.  The Borrowers have paid all taxes applicable to, or imposed on or in relation to it and its business.

	10.15	ISM Code and ISPS Code compliance.  All requirements of the ISM Code and the ISPS Code as they relate to the Borrowers, the Approved Manager and the Ships have been complied with.

	10.16	No Money Laundering.  Without prejudice to the generality of Clause 2.3, in relation to the borrowing by the Borrowers of the Loan, the performance and discharge of their obligations and liabilities under the Finance Documents, and the transactions and other arrangements effected or contemplated by the Finance Documents to which the Borrowers are a party, the Borrowers confirm that (i) they are acting for their  own account, (ii) that they will use the proceeds of the Loan for their  own benefit, under their full responsibility and exclusively for the purposes specified in this Agreement and (iii) that the foregoing will not involve or lead to contravention of any law, official requirements or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of the Directive (91/308/EEC) of the Council of the European Communities).

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	10.17	Patriot Act.  To the extent applicable to any of the Borrowers, the Borrowers are in compliance with (i) the Trading with the Enemy Act, and each of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V) and any other enabling legislation or executive order relating thereto and (ii) the PATRIOT Act. No part of the proceeds of the Loan will be used, directly or indirectly, for any payments to any government official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

	11	GENERAL UNDERTAKINGS

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

	11.2	Title; negative pledge; pari passu.  Each Borrower will:

	(a)	ensure that the Ships will maintain their present ownership, management, control and ultimate beneficial ownership and the Borrowers will hold the legal title to, and own the entire beneficial interest in the Ships’ Insurances and Earnings, free from all Security Interests and other interests and rights of every kind, except for those created by the Finance Documents and except

for Permitted Security Interests. For the avoidance of doubt the Lenders consent and agree to any changes relating to the shareholders of the Guarantor’s trading shares in the normal course of business and confirm that such changes do not violate the terms of this Agreement;

	(b)	not create or permit to arise any Security Interest (except for Permitted Security Interests) over any of its asset, present or future; and

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

	11.3	No disposal of assets.  The Borrowers will not (without the prior written consent of the Agent, acting with authority from the Majority Lenders) transfer, lease or otherwise dispose of:

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

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

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	11.4	No other liabilities or obligations to be incurred.  The Borrowers will not incur any liability or obligation except (i) liabilities and obligations under the Finance Documents to which they are a party and (ii) liabilities or obligations incurred in the ordinary course of their business of operating and chartering the Ships.

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

	11.6	Provision of financial statements.  The Borrowers will:

	(a)	procure that the Guarantor furnishes the Agent, with annual, audited and consolidated financial statements of the Guarantor within 180 days after the end of the financial year concerned, and prepared in accordance with GAAP consistently applied, such obligation commencing from 1st January 2015;

	(b)	send to the Agent, together with the Accounting Information referred to in paragraph (a) above, a Compliance Certificate; and

	(c)	provide the Agent from time to time as the Agent may reasonably request and in form and substance satisfactory to the Agent with any information on the financial condition, commitments, business and operations of the Borrowers and any other Security Party.

	11.7	Form of financial statements.  All financial statements delivered under Clause 11.6 will:

	(a)	give a true and fair view of the state of affairs of the Guarantor, or as the case may be, of the Borrowers at the date of those accounts and of the profit for the period to which those accounts relate; and

	(b)	fully disclose or provide for all significant liabilities of the Guarantor, or as the case may be, of the Borrowers for the period to which those accounts relate, to the Agent’s satisfaction.

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

	(a)	for the Borrowers and any Security Party to perform their respective obligations under each of the Finance Documents to which each of them is a party;

	(b)	for the validity or enforceability of any Finance Document to which each of the Borrowers and any Security Party are is party,

and the Borrowers will comply (and will ensure that each Security Party will comply) with the terms of all such consents.

	11.9	Maintenance of Security Interests.  The Borrowers will:

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

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

	11.10	Notification of litigation.  The Borrowers will provide the Agent with details of any legal or administrative action involving a Borrower, the Approved Manager and any other Security Party or a Ship, its Earnings or its Insurances as soon as such action is instituted or it becomes apparent to the Borrowers that it is likely to be instituted, unless it is clear that the legal or administrative action cannot be considered as having a material adverse effect on the business, assets or financial condition of them or as affecting the validity or enforceability  of any Finance Document.

	11.11	Principal place of business.  The Borrowers will not establish, or do anything as a result of which they would be deemed to have, a place of business in the United Kingdom or the United States of America.

	11.12	Confirmation of no default.  The Borrowers will, not more than once per quarter and within 2 Business Days after service by the Agent of a written request, serve on the Agent a notice which is signed by 2 directors of the Borrowers and which:

	(a)	states that no Event of Default or Potential Event of Default has occurred; or

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

	11.13	Notification of default.  The Borrowers will notify the Agent as soon as the Borrowers become aware of:

	(a)	the occurrence of an Event of Default or a Potential Event of Default which is continuing; or

	(b)	any matter which indicates that an Event of Default or a Potential Event of Default may have occurred,

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

	11.14	Provision of further information.  The Borrowers will inform the Agent of all major financial developments in the Borrowers and the Guarantor such as new loans, refinancing/restructuring of existing loans, new acquisitions and sales, contracts for term employment of the Ships and furthermore will, as soon as practicable after receiving the request, provide the Agent with any additional financial or other information relating to:

	(a)	the Borrowers, the Ships, their Insurances or their Earnings; or

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

which may be requested by any Creditor Party at any time.

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	11.15	Provision of customer information. The Borrowers will produce such documents and evidence as the Lenders shall from time to time require, based on applicable laws and regulations from time to time and the Lenders’ own internal guidelines from time to time, relating to the Lenders’ knowledge of its customers.

	11.16	Ownership.  The Borrowers or, as the case may be, any other corporate Security Party shall ensure that, throughout the Security Period without the prior written consent of the Agent, which shall not be unreasonably withheld, there shall be no change in the Directors and Officers in the Borrowers and in the Chief Executive Officer(s) of the Guarantor and moreover the Borrowers shall ensure that no change shall be made directly or indirectly in the ownership of the Borrowers, the beneficial ownership of the Guarantor, or the control of the Borrowers without the prior written consent of the Agent, which shall not be unreasonably withheld. For the avoidance of doubt the Lenders consent and agree to any changes relating to the Guarantor’s trading shares in the normal course of business and confirm that such changes do not violate the terms of this Agreement.

	11.17	Sanctions

The Borrowers undertake (and shall procure that each Security Party and any Affiliate of any of them undertakes) that:

	(a)	no member of the Group, no Security Party nor any of their subsidiaries, nor any of their respective directors, officers, employees (nor, to the knowledge of such Security Party, any of their affiliates, agents or representatives):

(i)            is a Restricted Party;

		(ii)	is owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Restricted Party, and none of such persons owns or controls a Restricted Party;

(iii)            owns or controls a Restricted Party; or

 

		(iv)	has received notice of or is aware of or is subject to any claim,proceedings, formal notice or investigation with respect to Sanctions;

	(b)	no proceeds of the Loan or any part thereof shall be made available, directly or indirectly, to any subsidiary, joint venture partner or other person to fund any trade, business or other activities involving or for the benefit of a Restricted Party or in any country or territory, that, at the time of such funding, is a Sanctioned Country nor shall they be otherwise directly or indirectly, applied in a manner that would result in a violation of Sanctions by any Security Party or for any purpose prohibited by Sanctions;

	(c)	no Security Party nor any of their subsidiaries, nor any of their respective directors, officers, employees (nor, to the knowledge of such Security Party, any of their affiliates, agents or representatives) has taken any action resulting in a violation by such persons of Sanctions or which constitutes or would constitute any such violation by the Borrowers or any Security Party.

	11.18	Provision of copies and translation of documents.  The Borrowers will supply the Agent with a sufficient number of copies of the documents referred to above to provide 1 copy for each Creditor Party.

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	12	CORPORATE UNDERTAKINGS

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

	12.2	Maintenance of status.  Each Borrower will maintain its separate corporate existence and remain in good standing under the laws of its incorporation.

	12.3	Negative undertakings.  Each Borrower will not:

	(a)	carry on any type of business other than the ownership, chartering and operation of its Ship in accordance with its constitutional documents;

	(b)	make any form of distribution (other than payment of a dividend pursuant to Clause 12.4) or effect any form of redemption, purchase, reduction or return of share capital or issue, allot or grant any person a right to any shares in its capital; or

	(c)	without the prior written consent of the Agent (acting on the instructions of the Majority Lenders), which consent and instructions will not be unreasonably be withheld, incur any debt or provide any form of credit or issue any guarantee to any person, except in the ordinary course of business; or

	(d)	without the prior written consent of the Agent (acting on the instructions of the Majority Lenders), open or maintain any account with any bank or financial institution except accounts with the Agent (or another office of the Agent in Cyprus or Luxembourg) for the purposes of the Finance Documents and accounts notified to the Agent prior to the date of this Agreement; or

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

	(f)	enter into any form of amalgamation, merger or de-merger or any form of reconstruction or reorganisation, or change its name; or

	(g)	purchase any further assets (other than the Ship owned by such Borrower), either directly or indirectly (through subsidiaries); or

	(h)	without the prior written consent of the Agent (acting on the instructions of the Majority Lenders), which consent and instructions will not be unreasonably be withheld, incur any other Financial Indebtedness. Any shareholder loans, inter company loans, affiliate loans and third party loans to the Borrowers shall be fully subordinated to the rights of the Creditor Parties under the Loan Agreement and the Finance Documents, on terms satisfactory to the Agent in its sole discretion.

	12.4	Dividends.  The Borrowers will not declare or pay any dividends or other distribution following the occurrence of an Event of Default which is continuing without the prior written consent of the Agents.

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	12.5	Cash Collateral Deposit.  The Borrowers shall ensure that the Guarantor will maintain from the Drawdown Date and at all times thereafter during the Security Period, in an account with the Agent or the Security Trustee or (at the Borrowers’ option and subject to the satisfaction of the Agent’s relevant reasonable requirements) with any of their affiliates outside Greece, in Cyprus or Luxembourg the Cash Collateral Deposit which is, and will not be subject to any Security Interest (other than pursuant to the relevant Account Pledge) as cash collateral.

	12.6	Debt to equity ratio. The Borrowers will ensure that the aggregate debt to equity ratio of the Ships will not exceed 75% of the aggregate Market Value of the Ships obtained in accordance with Clause 15.4.

	12.7	Minimum Net Worth. The Borrowers will ensure that the Guarantor’s minimum Net Worth listed in Nasdaq will be United States Dollars fifteen million (USD15,000,000).

	12.8	Compliance Check.  On each Compliance Date, compliance with the undertakings contained in Clause 12.5 and 15.1 shall be determined by reference to the Accounting Information for the twelve month period in each Financial Year of the Borrowers (commencing with the twelve month period ending on 31 December 2015) delivered to the Agent pursuant to the Agreement.  At the same time as it delivers that Accounting Information, the Borrowers shall deliver to the Agent a Compliance Certificate signed by a director of the Borrowers. If, prior to the delivery of a Compliance Certificate, the Borrowers become aware that such undertakings will not be complied with, the Borrowers shall immediately notify the Agent thereof.

	12.9	Application of FATCA

The Borrowers shall not become (and shall procure that no Security Party shall become) a FATCA FFI or a US Tax Obligor, without the prior written consent of the Lenders.

	13	INSURANCE

	13.1	General.  The Borrowers undertake with each Creditor Party to comply with the following provisions of this Clause 13 at all times during the Security Period, except as the Agent may (with the authority of the Majority Lenders), otherwise permit.

	13.2	Maintenance of obligatory insurances.  The Borrowers shall keep the Ships insured at the expense of the Borrowers against:

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

	(b)	war risks (including war protection and indemnity liabilities, terrorism, piracy and confiscation); and

	(c)	protection and indemnity risks (including cover for oil pollution liability risks); and

	(d)	loss of hire; and

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

	13.3	Terms of obligatory insurances.  The Borrowers shall effect such insurances:

	(a)	in Dollars;

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	(b)	in the case of fire and usual marine risks and war risks, in an amount on an agreed value basis at least the greater of (i) 125% of the amount of the Loan and (ii) the aggregate market value of the Ships;

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

	(d)	in relation to protection and indemnity risks in respect of the full value and tonnage of the Ship;

	(e)	on approved terms; and

	(f)	through approved brokers and with approved insurance companies and/or underwriters and/or war risks associations, and protection and indemnity risks shall be placed with a member of the International Group of P&I Clubs.

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

	(a)	be in the name of the respective Borrower or whenever the Security Trustee so requires, name (or be amended to name) the Security Trustee as additional named assured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Security Trustee, but without the Security Trustee thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;

	(b)	procure that the insurers shall note the Security Trustee’s interest and endorse the relevant notices of assignment and Loss Payable Clause on the relevant certificates of entry or policies and shall furnish the Security Trustee with a copy of such certificates of entry or policies;

	(c)	use their best enceavors to provide that all payments by or on behalf of the insurers under the obligatory insurances to the Security Trustee shall be made without set‐off, counterclaim or deductions or condition whatsoever;

	(d)	provide that following an Event of Default which is continuing the Security Trustee may make proof of loss if the Borrowers fail to do so.

	13.5	Renewal of obligatory insurances.  The Borrowers shall:

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

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

		(ii)	in case of any material change in insurance cover, obtain the Majority Lenders' approval to the matters referred to in paragraph (i) above;

	(b)	at least 14 days before the expiry of any obligatory insurance, renew the insurance; and

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	(c)	procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall before the expiry of the current insurances notify the Security Trustee in writing of the terms and conditions of the renewal.

	13.6	Copies of policies; letters of undertaking.  The Borrowers shall ensure that all approved brokers provide the Security Trustee with copies of all policies relating to the obligatory insurances which they effect or renew and of a letter or letters or undertaking in a form required by the Security Trustee and including undertakings by the approved brokers that:

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

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

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

	(d)	they will notify the Security Trustee, not less than 7 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from the Borrowers or their agents and, in the event of their receiving instructions to renew, they will promptly notify the Security Trustee of the terms of the instructions; and

	(e)	if the insurances form part of a fleet cover, they will not set off any claims on the Ships against premiums due for other vessels under the fleet cover or against premiums due for other insurances; neither will they cancel the insurance cover of the Ships for reason of non-payment of such premiums; and they will arrange for a separate policy to be issued in respect of the Ships forthwith upon being so requested by the Security Trustee.

	13.7	Copies of certificates of entry.  The Borrowers shall ensure that, from any protection and indemnity and/or war risks associations in which a Ship is entered, the Security Trustee is provided with:

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

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

	(c)	a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to that Ship.

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

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

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

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	13.11	Restrictions on employment.  The Borrowers shall not employ the Ships owned by them, nor permit them to be employed, outside the cover provided by any obligatory insurances.

	13.12	Compliance with terms of insurances.  The Borrowers shall not do or omit to do (or permit to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable thereunder repayable in whole or in part; and, in particular:

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

	(b)	the Borrowers shall not make any changes relating to the classification or classification society or manager or operator of the Ships approved by the underwriters of the obligatory insurances; and

	(c)	the Borrowers shall not employ the Ships, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.

	13.13	Alteration to terms of insurances.  The Borrowers shall neither make or agree to any material alteration to the terms of any obligatory insurance or waive any right relating to any obligatory insurance without the prior written consent of the Security Trustee (not to be unreasonably withheld).

	13.14	Settlement of claims.  The Borrowers shall not settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty without the prior written consent of the Security Trustee (which consent will not be unreasonably withheld), and shall do all things necessary and provide all documents, evidence and information to enable the Security Trustee to collect or recover any moneys which at any time become payable in respect of the obligatory insurances in accordance with the Finance Documents.

	13.15	Provision of copies of communications.  A Borrower shall, if required by the Security Trustee, provide the Security Trustee, at the time of each such communication, copies of all material written communications between that Borrower and:

	(a)	the approved brokers; and

	(b)	the approved protection and indemnity and/or war risks associations; and

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

		(i)	such Borrower's obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and

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

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

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

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

and that Borrower shall, forthwith upon demand, indemnify the Security Trustee in respect of all fees and other expenses incurred by or for the account of the Security Trustee in connection with any such report as is referred to in paragraph (a) above (it being understood however that prior to the occurrence of an Event of Default which is continuing the Borrowers will only bear the costs of such insurance reports once per year).

	13.17	Mortgagees’ interest, additional perils.  The Agent shall be entitled from time to time to effect, maintain and renew a mortgagee’s interest additional perils pollution insurance and a mortgagees’ interest insurance in an amount equal to 115% of the Loan and otherwise on such terms, through such insurers and generally in such manner as the Lenders may from time to time consider appropriate and the Borrowers shall upon demand against appropriate vouchers/invoices fully indemnify the Lenders in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any such insurance or dealing with, or considering, any matter arising out of any such insurance.

	13.18	Review of insurance requirements.  The Majority Lenders shall be entitled to review the requirements of this Clause 13 from time to time in order to take account of any changes in circumstances after the date of this Agreement which are, in the reasonable opinion of the Majority Lenders, significant and capable of affecting the Borrowers or the Ships and their insurance (including, without limitation, changes in the availability or the cost of insurance coverage or the risks to which the Borrowers may be subject), and, prior to the occurrence of an Event of Default which is continuing, may appoint insurance consultants in relation to this review at the cost of the Borrowers, subject to such appointment taking place once per year.

	13.19	Modification of insurance requirements.  The Security Trustee shall notify the Borrowers of any proposed modification under Clause 13.18 to the requirements of this Clause 13 which the Majority Lenders (acting reasonably) consider appropriate in the circumstances.

	13.20	Compliance with instructions.  The Security Trustee shall be entitled but will not be bound to (without prejudice to or limitation of any other rights which it may have or acquire under any Finance Document) to effect the insurances of a Ship  in the amount and in terms acceptable to the Security Trustee from time to time at the cost and on behalf of the Borrowers.

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	14	SHIPS COVENANTS

	14.1	General.  The Borrowers also undertake with each Creditor Party to comply with the following provisions of this Clause 14 at all times during the Security Period, except as the Agent (with the authority of the Majority Lenders) may otherwise permit.

	14.2	Ship's name and registration.  Each Borrower shall keep its Ship registered in its name under the Approved Flag; shall not do or allow to be done anything as a result of which such registration might be cancelled or imperilled; and shall not change the name or port of registry or flag of that Ship without the prior written consent of the Agent (acting on the authority of the Majority Lenders), such consent not to be unreasonably withheld.

	14.3	Repair and classification.  Each Borrower shall keep its Ship in a good and safe condition and state of repair:

	(a)	consistent with first‐class ship ownership and management practice;

	(b)	so as to maintain such Ship with the highest classification available for vessels of the same age, type and specification as that Ship with Lloyd’s Register of Shipping (or such other first class classification society being a member of IACS and as may be approved by the Security Trustee), free of overdue recommendations and conditions affecting the Ship’s class; and

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

	14.4	Modification.  The Borrowers shall not make any modification or repairs to, or replacement of, the Ships or equipment installed on her which would or might materially alter the structure, type or performance characteristics of the Ships or materially reduce her value.

	14.5	Removal of parts.  A Borrower shall not remove any material part of its Ship, or any item of equipment installed on, such Ship unless the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Security Interest or any right in favour of any person other than the Lenders and becomes on installation on that Ship the property of the relevant Borrower and subject to the security constituted by the relevant Mortgage Provided that a Borrower may install leased equipment owned by a third party if the equipment can be removed without any risk of damage to its Ship.

	14.6	Surveys.  Each Borrower shall submit its Ship regularly to all periodical or other surveys which may be required for classification purposes, at the cost and expense of the Borrowers. The Agent shall have the right to request one or more technical survey reports of the Ships by surveyors appointed to by the Agent at the cost of the Borrowers, provided that the frequency of such reports shall be limited to one per year (unless an Event of Default shall have occurred and is continuing).

	14.7	Inspection.  The Borrowers shall permit the Security Trustee (by surveyors or other persons appointed by it for that purpose) to board the Ship at all reasonable times, but without interference to the Ship’s trading and operations, to inspect her condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections.  Provided that the Ships are found to be in satisfactory condition, the cost of such inspections shall be borne by the Borrowers not more than once per year.

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	14.8	Prevention of and release from arrest.  Unless contested in good faith by appropriate proceedings, the Borrowers shall promptly discharge:

	(a)	all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ships, their Earnings or their Insurances; and

	(b)	all taxes, dues and other amounts charged in respect of the Ships, their Earnings or their Insurances;

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

	14.9	Compliance with laws etc.  Each Borrower shall:

	(a)	comply, or procure compliance with the ISM Code, the ISPS Code, all Environmental Laws and all other laws or regulations relating to the Ship owned by it, its ownership, operation and management or to the business of that Borrower (including, without limitation, the obtaining of all relevant certificates of financial responsibility and any other matters required for entering United States territorial waters or calling at any United States Port);

	(b)	comply (and procure that each Security Party and each Affiliate of any of them shall comply) in all aspects with all Sanctions;

	(c)	not employ its Ship nor allow her employment in any manner contrary to any Sanctions;

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

	14.10	Provision of information.  The Borrowers shall promptly provide the Security Trustee with any information which the Majority Lenders reasonably request regarding:

	(a)	the Ships, their employment, position and engagements;

	(b)	the Earnings and payments and amounts due to the master and crew of the Ships;

	(c)	any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of the Ships and any payments made in respect of the Ships;

	(d)	any towages and salvages;

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	(e)	its compliance, the Approved Manager's compliance or the compliance of the Ships with the ISM Code and, upon the Security Trustee's request, provide copies of any current charter relating to the Ship and of any current charter guarantee, and copies of the ISM Code and ISPS Code documentation.

	14.11	Notification of certain events.  The Borrower shall immediately notify the Security Trustee by letter of:

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

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

	(c)	any requirement or recommendation made by any insurer or classification society (or any withdrawal of class) or by any competent authority which is not complied with in accordance with its terms;

	(d)	any arrest or detention of a Ship which is not lifted within forth eight (48) hours, any exercise or purported exercise of any lien on a Ship or her Earnings or any requisition of that Ship for hire;

	(e)	any intended dry docking of a Ship;

	(f)	any Environmental Claim made against the Borrowers or in connection with the Ships or any Environmental Incident;

	(g)	any claim for breach of the ISM Code or the ISPS Code being made against the Borrowers, the Approved Manager or otherwise in connection with the Ships; or

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

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

 

	14.12	Restrictions on chartering, appointment of managers, etc.  The Borrowers shall not without the prior written consent of the Agent (acting on the authority of the Majority Lenders):

	(a)	let a Ship on demise charter for any period;

	(b)	enter into any time or consecutive voyage charter in respect of a Ship for a term which exceeds, or which by virtue of any optional extensions may exceed, 12 months;

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

	(d)	charter a Ship otherwise than on bona fide arm's length terms  at the time when that Ship is fixed;

	(e)	appoint a commercial, technical or operational manager of a Ship (other than the Approved Manager) or agree to any material alteration to the terms of the Approved Manager's appointment (and in respect of which, the consent of the Agent shall not be unreasonably withheld);

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	(f)	de‐activate or lay up a Ship;

	(g)	change the legal ownership of the shares in a Ship;

	(h)	put a Ship into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed Three hundred thousand United States Dollars ($300,000) (or the equivalent in any other currency) unless that person has first given to the Security Trustee and in terms satisfactory to it a written undertaking not to exercise any lien on that Ship or her Earnings for the cost of such work or otherwise; or

	(i)	change the classification society with which a Ship is classed (and in respect of which, the consent of the Agent and the authority of the Majority Lenders shall not be unreasonably withheld).

	14.13	Notice of Mortgage.  The Borrowers shall keep each Mortgage registered against the relevant Ship as a valid first priority mortgage, carry on board that Ship a certified copy of the relevant Mortgage and place and maintain in a conspicuous place in the navigation room and the Master's cabin of such Ship a framed printed notice stating that such Ship is mortgaged by the relevant Borrower to the Lenders.

	14.14	Sharing of Earnings.   The Borrowers shall not enter into any agreement or arrangement for the sharing of any Earnings other than a profit sharing agreed at arm’s length under a charter party provided that it is not a part of any pool arrangement, in which case the Agent’s prior written consent will be required (such consent not to be unreasonably withheld).

	14.15	ISPS Code.  The Borrowers shall comply with the ISPS Code and in particular, without limitation, shall:

	(a)	procure that a Ship and the company responsible for such Ship’s compliance with the ISPS Code, comply with the ISPS Code; and

	(b)	maintain for each Ship an ISSC; and

	(c)	notify the Lender immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC.

	14.16	Time charter assignment.  If a Borrower enters into any time charter or contract of affreightment in respect of its Ship which is of twelve (12) months or more in duration, or is capable of exceeding twelve (12) months in duration, that Borrower shall execute in favour of the Security Trustee an assignment and notice of assignment (and shall use its best endeavours to obtain an acknowledgement of the same from the relevant charterer or counterparty) of such time charter or contract of affreightment in such form and on such terms as the Agent may reasonably require, and shall deliver to the Agent such other documents equivalent to those referred to at paragraphs 3, 4 and 5 of Schedule 3 hereof as the Agent may require.

	14.17	No freight derivatives. The Borrowers shall not enter into or agree to enter into (without the consent of the Majority Lenders) any freight derivatives or any other instruments which have the effect of hedging forward exposure to freight derivatives.

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	15	SECURITY COVER

	15.1	Provision of additional security cover; prepayment of Loan.  The Borrowers undertake with each Creditor Party that if the Agent (acting on the instructions of the Majority Lenders) notifies the Borrowers that:

	(a)	the aggregate market values (determined as provided below) of the Ships; plus

	(b)	the net realisable value of any additional security previously provided under this Clause 15 (including the Cash Collateral Deposit but always excluding amounts standing to the credit of the Operating Account, the Retention Account), is

is during the Security Period below one hundred and thirty per cent (130%) of the outstanding amount of the Loan, the Borrowers will, within thirty (30) days after the date on which the Agent's notice is served, either:

		(i)	provide, or ensure that a third party provides, additional security which, in the opinion of the Majority Lenders, has a net realisable value at least equal to the shortfall and which consists of either (aa) cash pledged to the Security Trustee which when in the form of cash in Dollars, will be valued on a Dollar for Dollar basis or (bb) a Security Interest (including, but not limited to, a first priority mortgage or a second priority mortgage over another vessel), covering such asset or assets and documented in such terms as the Agent may, with authorisation from the Majority Lenders, approve or require; or

		(ii)	prepay in accordance with Clause 8 such part of the Loan as will eliminate the shortfall, to be applied against repayment instalments (including the balloon payment) on a pro rata basis.

	15.2	Meaning of additional security.  In Clause 15.1 “security” means a Security Interest over an asset or assets (whether securing the Borrowers’ liabilities under the Finance Documents or a guarantee in respect of those liabilities), or a guarantee, letter of credit or other security in respect of the Borrowers’ liabilities under the Finance Documents, in each case in a form and substance acceptable to the Agent in its sole discretion.

	15.3	Requirement for additional documents.  The Borrowers shall not be deemed to have complied with Clause 15.1(i) above until the Agent has received in connection with the additional security certified copies of documents of the kinds referred to in paragraphs 3, 4 and 5 of Schedule 3 and such legal opinions in terms acceptable to lawyers selected by the Agent in its sole discretion.

	15.4	Valuation of Ship.  Subject to the following provisions of this Clause 15.4, the  Market Value of the Ships shall be determined:

	(a)	in Dollars, as at the date of (or no earlier than 30 days prior to) such valuation;

	(b)	by an independent shipbroker selected by or acceptable to the Agent and reporting to the Agent;

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

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

	15.5	Value of additional vessel security.  The net realisable value of any additional security which is provided under Clause 15.2 and which consists of a Security Interest over a vessel other than a Ship shall be that shown by way of a valuation complying with the requirements of Clause 15.4.

	15.6	Valuations binding and conclusive.  Any valuation under Clause 15.1(i), 15.4 or 15.5 shall be binding and conclusive evidence of the Market Value of the Ships or of the other assets it refers to at the date of such valuation.

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

	15.8	Payment of valuation expenses. Without prejudice to the generality of the Borrowers’ obligations under Clauses 20.2, 20.3 and 21.3, the Borrowers shall, subject to the provisions of Clause 15.9, on demand, pay the Agent the amount of the fees and expenses of any shipbrokers or experts instructed by the Agent under this Clause and all legal and other expenses incurred by any Creditor Party in connection with any matter arising out of this Clause.

	15.9	Frequency of valuations. The Agent shall be entitled to obtain written valuations of the Ships prior to the drawdown of the Loan and any time during the Security Period, provided that after drawdown of the Loan the costs and expenses of such shall only be borne by the Borrowers once per year (unless an Event of Default has occurred and is continuing or a mandatory prepayment event under Clause 8.8 has occurred, in which case the Agent shall be entitled to obtain a valuation at any time, at the cost and expense of the Borrowers).

	16	PAYMENTS AND CALCULATIONS

	16.1	Currency and method of payments.  All payments to be made by the Lenders or by the Borrowers under a Finance Document shall be made to the Agent or to the Security Trustee, in the case of an amount payable to it:

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

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

		(iii)	if in Dollars, to the account of the Agent with such corresponding bank in New York as the Agent may from time to time notify to the Borrowers and the other Creditor Parties; and

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

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

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

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

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

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

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

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

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

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

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

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

	(a)	refund the sum in full to the Agent; and

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

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

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

	16.10	Agent's memorandum account. The Agent shall maintain a memorandum account showing the amounts advanced by the Lenders and all other sums owing to the Agent, the Security Trustee and each Lender from the Borrowers and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrowers and any Security Party.

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

	17	APPLICATION OF RECEIPTS

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

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

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

		(ii)	secondly, in or towards satisfaction pro rata of any and all amounts of interest or default interest payable to the Creditor Parties under the Finance Documents but shall have failed to pay or deliver to the Creditor Parties at the time of application or distribution under this Clause 17); and

		(iii)	thirdly, in or towards satisfaction pro rata of the Loan;

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

	(c)	THIRDLY: any surplus shall be paid to the Borrowers or to any other person appearing to be entitled to it.

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	17.2	Variation of order of application.  The Agent may, following the occurrence of an Event of Default or a Potential Event of Default which is continuing, with the authorisation of the Majority Lenders by notice to the Borrowers, the Security Parties and the other Creditor Parties provide for a different manner of application from that set out in Clause 17.1 either as regards a specified sum or sums or as regards sums in a specified category or categories.

		17.3	Appropriation rights overriden. This Clause 17 and any notice which the Agent gives under Clause 17.2 shall override any right of appropriation possessed, and any appropriation made, by the Borrowers or any Security Party.

	18	APPLICATION OF EARNINGS

	18.1	Payment and application of Earnings.  The Borrowers undertake with the Lenders to ensure that, throughout the Security Period (and subject only to the provisions of an Assignment for a Ship), all the Earnings of a Ship are paid to the relevant Operating Account and shall be applied as follows:

	(a)	first, towards payment of all sums other than principal and interest due to the Lenders under this Agreement and the other Finance Documents;

	(b)	secondly, towards payment of the next instalment of principal and the next payment of interest due to the Lenders in accordance with the provisions of Clause 18.2; and

	(c)	thirdly, any surplus shall (subject always to the other provisions of this Clause 18 and provided no Event of Default is continuing) be available to the Borrowers, and

it is expressly agreed that so long as no Event of Default shall have occurred and is continuing, the Borrowers shall be entitled to withdraw from the Operating Account(s) any amount, provided however that if in the opinion of the Agent or the Security Trustee (as the case may be) there will be insufficient sums standing to the credit of the Operating Account(s) to meet payments under (a) and (b) above, the Agent or the Security Trustee (as the case may be) shall be entitled to refuse any withdrawal from the Operating Account(s).

	18.2	Monthly retentions.  The Borrowers undertake with the Lender to ensure that, in each calendar month of the Security Period commencing one month after the Drawdown Date, on such dates as the Lenders may from time totime specify, there is transferred to the Retention Account out of the aggregate Earnings received in the Operating Account(s) during the preceding calendar month:

	(a)	one‐third of the amount of the repayment instalment falling due under Clause 8 on the next Repayment Date; and

	(b)	the relevant fraction of the aggregate amount of interest on the Loan which is payable on the next due date for payment of interest under this Agreement.

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

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

	18.4	Application of retentions.  Until an Event of Default occurs, the Lenders shall on each Repayment Date and on each due date for the payment of interest under this Agreement apply in accordance with the payment details set out in Clause 16.1 so much of the balance on the Retention Account as equals:

	(a)	the repayment instalment due on that Repayment Date; or

	(b)	the amount of interest payable on that interest payment date;

in discharge of the Borrowers’ liability for that repayment instalment or that interest.

	18.5	Interest accrued on Retention Account.  Any credit balance on the Retention Account shall bear interest at the rate from time to time offered by the Lenders to its customers for Dollar deposits of similar amounts and for periods similar to those for which such balance appears to the Lenders likely to remain on the Retention Account. Interest accruing under this Clause shall be credited to the Operating Account.

	18.6	Location of accounts.  The Borrowers shall promptly:

	(a)	comply with any requirement of the Agent as to the location or re‐location of the Operating Account(s) and the Retention Account (or either of them);

	(b)	execute any documents which the Lenders specify to create or maintain in favour of the Security Trustee a Security Interest over (and/or rights of set-off, consolidation or other rights in relation to) the Operating Account and the Retention Account.

	18.7	Debits for expenses etc.  The Lenders shall be entitled (but not obliged) from time to time to debit the Operating Account with prior notice in order to discharge any amount due and payable to it under Clause 20 or 21 or payment of which they have become entitled to demand under Clause 20 or 21.

	
18.8

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

	(a)	the liability of the Borrowers to make payments of principal and interest on the due dates; or

	(b)	any other liability or obligation of the Borrowers or any Security Party under any Finance Document.

	19	EVENTS OF DEFAULT

	19.1	Events of Default.  An Event of Default occurs if:

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	(a)	the Borrowers or any Security Party fail to pay when due or (if payable on demand) three (3) days following the date on which the written demand is served any sum payable under a Finance Document or under any document relating to a Finance Document, unless such failure to pay is caused by an administrative or technical error or any disruption event in the payment/communication system which is beyond the control of the Borrowers, in which case the Borrowers shall rectify such error within three (3) Business Days; or

	(b)	any breach occurs of Clauses 9.2, 11.2, 11.11, 11.17, 12.2, 12.3, 13 or 15.1 and in case any such breach (other than those referred to in Clauses 9.2. 13 and 15.1 hereinabove to which other grace periods are applicable, as therein provided) is in the opinion of the Security Trustee, capable of remedy, if it will continue un-remedied for seven (7) Business Days after its occurrence; or

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

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

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

	(f)	any of the following occurs in relation to any Financial Indebtedness of the Borrowers:

		(i)	any Financial Indebtedness of the Borrowers is not paid when due or, if  payable on demand, three (3) days following the date on which the written demand is served; or

		(ii)	any Financial Indebtedness of the Borrowers becomes due and payable or capable of being declared due and payable prior to its stated maturity date as a consequence of any event of default; or

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

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

		(v)	any Security Interest securing any Financial Indebtedness of the Borrowers becomes enforceable; or

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	(g)	any of the following occurs in relation to the Borrowers:

		(i)	the Borrowers become, in the opinion of the Majority Lenders, unable to pay their debts as they fall due; or

		(ii)	any assets of the Borrowers are subject to any form of execution, attachment, arrest, sequestration or distress in respect of a sum of, or sums aggregating, $300,000 or more or the equivalent in another currency unless such execution, attachment, arrest, sequestration or distress is being contested in good faith and on substantial grounds and is discussed or withdrawn within thirty (30) days of the occurrence thereof; or

		(iii)	any administrative or other receiver is appointed over any asset of the Borrowers; or

		(iv)	the Borrowers make any formal declaration of bankruptcy or any formal statement to the effect that they are insolvent or likely to become insolvent, or a winding up or administration order is made in relation to the Borrowers, or the members or directors of the Borrowers pass a resolution to the effect that it should be wound up, placed in administration; or

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

		(vi)	the Borrowers petition a court, or present any proposal for, any form of judicial or non‐judicial suspension or deferral of payments, reorganisation of their debt (or certain of their debt) or arrangement with all or a substantial proportion (by number or value) of their creditors or of any class of them or any such suspension or deferral of payments, reorganisation or arrangement is effected by court order, contract or otherwise; or

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

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

	(h)	the Borrowers cease or suspend carrying on its business or a part of their business which, in the opinion of the Majority Lenders, is material in the context of this Agreement; or

	(i)	it becomes unlawful in any Pertinent Jurisdiction or impossible:

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

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

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

	(k)	it appears to the Majority Lenders that, without their prior consent, a change has occurred after the date of this Agreement in the beneficial ownership of the shares in the Borrowers as declared to the Bank prior to the execution of this Agreement. For the avoidance of doubt the Bank consents and agrees to any changes relating to the Guarantor’s trading shares in the normal course of business and confirm that such changes do not violate the terms of this Agreement; or

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

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

	(n)	If any debt of any Security Party (which in the case of the Guarantor exceeds an aggregate amount of $750,000) is not paid when due or any debt of any Security Party (which in the case of the Guarantor exceeds an aggregate amount of $750,000) becomes due and payable prior to the date when it would otherwise have become due (unless as a result of the exercise by the relevant Security Party of a voluntary right of prepayment), or any creditor of any Security Party becomes entitled to declare its claim (which in the case of the Guarantor exceeds an aggregate amount of $750,000) 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 and such debt is not discharged within seven (7) Business Days; or

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

		(i)	a Material Adverse Effect; or

		(ii)	any accident or other event involving the Ship,

in the light of which the Majority Lenders (acting reasonably) consider that there is a significant risk that the Borrowers are, or will later become, unable to discharge their liabilities under the Finance Documents as they fall due.

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

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

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

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

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

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

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

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

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

	19.6	Notification of Creditor Parties and Security Parties.  The Agent shall send to each Lender, the Security Trustee, the Account Bank and each Security Party a copy or the text of any notice which the Agent serves on the Borrowers under Clause 19.2; but the notice shall become effective when it is served on the Borrowers, and no failure or delay by the Agent to send a copy or the text of the notice to any other person shall invalidate the notice or provide the Borrowers or any Security Party with any form of claim or defence.

	19.7	Creditor Parties’ rights unimpaired.  Nothing in this Clause shall be taken to impair or restrict the exercise of any right given to individual Lenders under a Finance Document or the general law; and, in particular, this Clause is without prejudice to Clause 3.1 and Clause 3.2.

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

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

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

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

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

	19.10	Relevant Persons.  In this Clause 19, a “Relevant Person” means the Borrowers, the Approved Manager, and any other Security Party.

	20	FEES AND EXPENSES

	20.1	Fees.  The Borrowers shall pay to the Agent a non-refundable front end flat fee of 1.5% of the amount of the Loan for the account of the Arranger, on the Drawdown Date.

	20.2	Costs of negotiation, preparation etc.  The Borrowers shall pay to the Agent on its demand the amount of all expenses (including, but not limited to, all legal expenses and VAT, if applicable) incurred by the Agent or the Security Trustee in connection with the negotiation, preparation, execution or registration of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document, other than any syndication costs/expenses.

	20.3	Costs of variations, amendments, enforcement etc.  The Borrowers shall pay to the Agent, on the Agent's demand, the amount of all expenses incurred by a Lender in connection with:

	(a)	any amendment or supplement to a Finance Document;

	(b)	any consent or waiver by the Lenders, the Majority Lenders or the Creditor Party concerned under or in connection with a Finance Document;

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

	(d)	any step taken by the Agent or the Security Trustee concerned with a view to the protection, exercise or enforcement of any right or Security Interest created by a Finance Document or for any similar purpose.

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

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

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	21	INDEMNITIES

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

	(a)	the Loan not being borrowed on the date specified in the Drawdown Notice for any reason other than a default by the Lender claiming the indemnity;

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

	(c)	any failure (for whatever reason) by the Borrowers to make payment of any amount due under a Finance Document on the due date or, if  payable on demand, three (3) days following the date on which the written demand is served (after giving credit for any default interest paid by the Borrowers on the amount concerned under Clause 7);

	(d)	the occurrence and/or continuance of an Event of Default or a Potential Event of Default (including, but not limited to, a breach of Clauses 11.17 or 11.18) and/or the acceleration of repayment of the Loan under Clause 19;

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

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

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

	(b)	in terminating, or reversing or otherwise in connection with, any open position arising under this Agreement.

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

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

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

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other than liability items which are shown to have been caused by the gross negligence or the wilful misconduct of the Agent's or (as the case may be) the Security Trustee's own officers or employees.

Without prejudice to its generality, this Clause 21.3 covers any claims, expenses, liabilities and losses which arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code, the ISPS Code or any Environmental Law.

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

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

	(b)	any liability items which arise, or are asserted, under or in connection with any law relating to safety at sea, pollution or the protection of the environment if such liability items would not have arise or asserted against the Lender or Agent or the Security Trustee (as the case may be) if any of them had not entered into any of the Finance 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 Finance.

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

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

	(b)	obtaining an order or judgment from any court or other tribunal; or

	(c)	enforcing any such order or judgment;

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

 

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

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

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

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

	21.8	Mandatory Costs.  The Borrowers shall, on demand by the Agent, pay to the Agent for the account of the relevant Lender, such amount which any Lender certifies in a notice to the Agent to be its good faith determination of the amount necessary to compensate it for complying with:

	(a)	in the case of a Lender lending from a lending office in a Participating Member State, the minimum reserve requirements (or other requirements having the same or similar purpose) of the European Central Bank or any other authority or agency which replaces all or any of its functions) in respect of loans made from that lending office; and

	(b)	in the case of any Lender lending from a lending office in the United Kingdom, any reserve asset, special deposit or liquidity requirements (or other requirements having the same or similar purpose) of the Bank of England (or any other governmental authority or agency) and/or paying any fees to the Financial Conduct Authority and/or the Prudential Regulation Authority (or any other governmental authority or agency which replaces all or any of their functions), which, in each case, is referable to that Lender's participation in the Loan.

	22	NO SET-OFF OR TAX DEDUCTION

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

	(a)	without any form of set‐off, cross-claim or condition; and

	(b)	free and clear of any tax deduction except a tax deduction which the Borrowers are required by law to make.

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

	(a)	the Borrowers shall notify the Agent as soon as it becomes aware of the requirement;

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

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

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

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

	22.5	FATCA Information.

	(a)	Subject to paragraph (c) below, each Party shall, within ten (10) Business Days of a reasonable request by another Party:

		(i)	confirm to that other Party whether it is a FATCA Exempt Party or is not a FATCA Exempt Party; and

		(ii)	supply to that other Party such forms, documentation and other information relating to its status under FATCA (including its applicable "passthru payment percentage" or other information required under the US Treasury regulations or other official guidance including intergovernmental agreements) as that other Party reasonably requests for the purposes of that other Party's compliance with FATCA.

	(b)	If a Party confirms to another Party pursuant to paragraph (a)(i) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.

	(c)	Paragraph (a) above shall not oblige any Creditor Party to do anything which would or might in its reasonable opinion constitute a breach of any law or regulation, any policy of that party, any fiduciary duty or any duty of confidentiality, or to disclose any confidential information (including, without limitation, its tax returns and calculations); provided, however, that information required (or equivalent to the information so required) by United States Internal Revenue Service Forms W-8 or W-9 (or any successor forms) shall not be treated as confidential information of such party for purposes of this paragraph (c).

	(d)	If a Party fails to confirm its status or to supply forms, documentation or other information requested in accordance with paragraph (a) above (including, for the avoidance of doubt, where paragraph (c) above applies), then:

		(i)	if that Party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such Party shall be treated for the purposes of the Finance Documents as if it is not a FATCA Exempt Party; and

		(ii)	if that Party failed to confirm its applicable "passthru payment percentage" then such Party shall be treated for the purposes of the Finance Documents (and payments made thereunder) as if its applicable "passthru payment percentage" is 100%,

until (in each case) such time as the Party in question provides the requested confirmation, forms, documentation or other information.

	22.6	FATCA Withholding.

	(a)	Each Party may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.

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	(b)	Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction) notify the Party to whom it is making the payment and, in addition, shall notify the Borrowers, the Agent and the other Creditor Parties.

	23	ILLEGALITY, ETC

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

	(a)	unlawful or prohibited (including, without limitation, due to a breach of Clauses 11.17 or 11.18) as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or

	(b)	contrary to, or inconsistent with, any regulation,

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

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

	23.3	Prepayment; termination of Commitment.  On the Agent notifying the Borrowers under Clause 23.2, the Notifying Lender's Commitment shall terminate; and thereupon or, if later, on the date specified in the Notifying Lender's notice under Clause 23.1 as the date on which the notified event would become effective the Borrowers shall prepay the Notifying Lender's Contribution in accordance with Clause 8.

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

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

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

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

	24	INCREASED COSTS

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

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

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	(b)	the effect of complying with any regulation (including any regulation which relates to capital adequacy or liquidity controls or which affects the manner in which the Notifying Lender allocates capital resources to its obligations under this Agreement) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Agreement (including, but not limited to, Basel III, CRR and CRD IV costs),

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

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

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

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

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

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

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

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

	24.3	Payment of increased costs.  The Borrowers shall pay to the Agent, on the Agent's demand, for the account of the Notifying Lender the amounts which the Agent from time to time notifies the Borrowers that the Notifying Lender has specified to be necessary to compensate the Notifying Lender for the increased cost.

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

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

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

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

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

	25	SET‐OFF

	25.1	Application of credit balances.  Each Creditor Party may without prior notice at any time after the occurrence of an Event of Default which is continuing:

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

	(b)	for that purpose:

		(i)	break, or alter the maturity of, all or any part of a deposit of the Borrowers;

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

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

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

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

	25.4	No Security Interest.  This Clause 25 gives the Lenders a contractual right of set off only, and does not create any equitable charge or other Security Interest over any credit balance of the Borrowers.

	25.5	No Borrowers set off.  The Borrowers shall not have a right of set off in relation to sums that may be due from any Creditor Party under this Agreement or any of the other Finance Documents.

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	26	TRANSFERS AND CHANGES IN LENDING OFFICES

	26.1	Transfer by the Borrowers.  The Borrowers may not:

	(a)	without the prior written consent of the Agent (given on the instructions of all of the Lenders), transfer any of its rights or obligations under any Finance Document;

	(b)	without the prior written consent of the Agent (given on the instructions of all the Lenders), enter into any merger, de-merger or other reorganisation, or carry out any other act, as a result of which any of its rights or liabilities would vest in, or pass to, another person.

	26.2	Transfer by a Lender.  Subject to Clause 26.4, a Lender (the “Transferor Lender”) may, at its sole discretion, without the consent of and/or the prior consultation with the Borrowers (but with notice to the Borrower) and/or any Security Party, at any time assign or transfer:

	(a)	its rights in respect of all or part of its Contribution; or

	(b)	its obligations in respect of all or part of its Commitment; or

	(c)	a combination of (a) and (b);

to be (in the case of its rights) assigned or transferred to, or (in the case of its obligations) assumed by, another bank or financial institution, or by a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (a “Transferee Lender”) by delivering to the Agent a completed certificate in the form set out in Schedule 4 with any modifications approved or required by the Agent (a “Transfer Certificate”) executed by the Transferor Lender and the Transferee Lender.

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

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

	(a)	sign the Transfer Certificate on behalf of itself, the Borrowers, the Security Parties, the Security Trustee, the Arranger, the Account Bank and each of the Lenders;

	(b)	on behalf of the Transferee Lender, send to the Borrowers and each Security Party letters or faxes notifying them of the Transfer Certificate and attaching a copy of it;

	(c)	send to the Transferee Lender copies of the letters or faxes sent under paragraph (b) above.

	26.4	Effective Date of Transfer Certificate.  A Transfer Certificate becomes effective on the date, if any, specified in the Transfer Certificate as its effective date Provided that it is signed by the Agent under Clause 26.3 on or before that date.

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	26.5	No transfer without Transfer Certificate.  No assignment or transfer of any right or obligation of a Lender under any Finance Document is binding on, or effective in relation to, the Borrowers, any Security Party, the Agent or the Security Trustee unless it is effected, evidenced or perfected by a Transfer Certificate.

	26.6	Lender re-organisation; waiver of Transfer Certificate.  However, if a Lender enters into any merger, de-merger or other reorganisation as a result of which all its rights or obligations vest in another person (the “successor”), the Agent may, if it sees fit, by notice to the successor and the Borrowers and the Security Trustee waive the need for the execution and delivery of a Transfer Certificate; and, upon service of the Agent's notice, the successor shall become a Lender with the same Commitment and Contribution as were held by the predecessor Lender.  In addition, where security rights (such as pledge and mortgage rights) created in the interest of the Lender concerned were transferred to the successor as a result of such a merger, de-merger or other reorganisation, then such rights will serve as if they were created in the interest of the successor.

	26.7	Effect of Transfer Certificate.  A Transfer Certificate takes effect in accordance with English law as follows:

	(a)	to the extent specified in the Transfer Certificate, all rights and interests (present, future or contingent) which the Transferor Lender has under or by virtue of the Finance Documents are assigned to the Transferee Lender absolutely, free of any defects in the Transferor Lender's title and of any rights or equities which the Borrowers or any Security Party had against the Transferor Lender;

	(b)	the Transferor Lender's Commitment is discharged to the extent specified in the Transfer Certificate;

	(c)	the Transferee Lender becomes a Lender with the Contribution previously held by the Transferor Lender and a Commitment of an amount specified in the Transfer Certificate;

	(d)	the Transferee Lender becomes bound by all the provisions of the Finance Documents which are applicable to the Lenders generally, including those about pro‐rata sharing and the exclusion of liability on the part of, and the indemnification of, the Agent and the Security Trustee and, to the extent that the Transferee Lender becomes bound by those provisions (other than those relating to exclusion of liability), the Transferor Lender ceases to be bound by them;

	(e)	any part of the Loan which the Transferee Lender advances after the Transfer Certificate's effective date ranks in point of priority and security in the same way as it would have ranked had it been advanced by the transferor, assuming that any defects in the transferor's title and any rights or equities of the Borrowers or any Security Party against the Transferor Lender had not existed;

	(f)	the Transferee Lender becomes entitled to all the rights under the Finance Documents which are applicable to the Lenders generally, including but not limited to those relating to the Majority Lenders and those under Clause 5.7 and Clause 20, and to the extent that the Transferee Lender becomes entitled to such rights, the Transferor Lender ceases to be entitled to them; and

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	(g)	in respect of any breach of a warranty, undertaking, condition or other provision of a Finance Document or any misrepresentation made in or in connection with a Finance Document, the Transferee Lender shall be entitled to recover damages by reference to the loss incurred by it as a result of the breach or misrepresentation, irrespective of whether the original Lender would have incurred a loss of that kind or amount.

The rights and equities of the Borrowers or any Security Party referred to above include, but are not limited to, any right of set off and any other kind of cross‐claim.

	26.8	Maintenance of register of Lenders.  During the Security Period the Agent shall maintain a register in which it shall record the name, Commitment, Contribution and administrative details (including the lending office) from time to time of each Lender holding a Transfer Certificate and the effective date (in accordance with Clause 26.4) of the Transfer Certificate; and the Agent shall make the register available for inspection by any Lender, the Security Trustee and the Borrowers during normal banking hours, subject to receiving at least 3 Business Days prior notice.

	26.9	Reliance on register of Lenders.  The entries on that register shall, in the absence of manifest error, be conclusive in determining the identities of the Lenders and the amounts of their Commitments and Contributions and the effective dates of Transfer Certificates and may be relied upon by the Agent and the other parties to the Finance Documents for all purposes relating to the Finance Documents.

	26.10	Authorisation of Agent to sign Transfer Certificates.  The Borrowers, the Arranger, the Account Bank, the Security Trustee, each Lender irrevocably authorise the Agent to sign Transfer Certificates on its behalf.

	26.11	Registration fee.  In respect of any Transfer Certificate, the Agent shall be entitled to recover a registration fee of $2,500 from the Transferor Lender or (at the Agent's option) the Transferee Lender. Such fees will not burden any of the Security Parties under any circumstances.

	26.12	Sub-participation; subrogation assignment.  A Lender may sub‐participate all or any part of its rights and/or obligations under or in connection with the Finance Documents without the consent of, or any notice to, the Borrowers, any Security Party, the Agent or the Security Trustee; and the Lenders may assign, in any manner and terms agreed by the Majority Lenders, the Agent and the Security Trustee, all or any part of those rights to an insurer or surety who has become subrogated to them.

	26.13	
Disclosure of information.  A Lender may disclose to a potential Transferee Lender or sub‐participant any information which the Lender has received in relation to the Borrowers, any Security Party or their affairs under or in connection with any Finance Document.

 

	26.14	Change of lending office.  A Lender may change its lending office without consultation with the Borrowers by giving notice to the Agent and the change shall become effective on the later of:

	(a)	the date on which the Agent receives the notice; and

	(b)	the date, if any, specified in the notice as the date on which the change will come into effect.

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	26.15	Notification.  On receiving such a notice, the Agent shall notify the Borrowers and the Security Trustee; and, until the Agent receives such a notice, it shall be entitled to assume that a Lender is acting through the lending office of which the Agent last had notice.

	26.16	Consent to disclosure.  The Borrowers authorise any of the Lenders to disclose all information related or connected to:

	(a)	the Ships or any other vessel owned or operated by a Security Party;

	(b)	the negotiation, drafting and content of this Agreement and the Finance Documents;

	(c)	the Loan; or

	(d)	any Security Party,

to any service provider (included but not limited to professional advisers, auditors, lawyers, accountants, surveyors, valuers, insurers, insurance advisers and brokers) which any of the Lenders may in its discretion deem necessary or desirable in connection with this Agreement or any other Finance Documents and/or the protection or enforcement of its rights thereunder.

	27	VARIATIONS AND WAIVERS

	27.1	Variations, waivers etc. by Majority Lenders.  Subject to Clause 27.2, a document shall be effective to vary, waive, suspend or limit any provision of a Finance Document, or any Creditor Party's rights or remedies under such a provision or the general law, only if the document is signed, or specifically agreed to by fax, by the Borrowers, by the Agent on behalf of the Majority Lenders, by the Agent and the Security Trustee in their own rights, and, if the document relates to a Finance Document to which a Security Party is party, by that Security Party.

	27.2	Variations, waivers etc. requiring agreement of all Lenders.  However, as regards the following, Clause 27.1 applies as if the words “by the Agent on behalf of the Majority Lenders” were replaced by the words “by or on behalf of every Lender”:

	(a)	a change in the Margin or in the definition of LIBOR;

	(b)	a change to the date for, the amount of, any payment of principal, interest, fees, or other sums payable under this Agreement;

	(c)	a change to any Lender's Commitment;

	(d)	an extension of the Availability Period;

	(e)	a change to the definition of “Majority Lenders” or “Finance Documents”;

	(f)	a change to the preamble or to Clause 2, 3, 4, 5.1, 11.17, 11.18, 17, 19 or 30;

	(g)	a change to this Clause 27;

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	(h)	any release of, or material variation to, a Security Interest, guarantee, indemnity or subordination arrangement set out in a Finance Document; and

	(i)	any other change or matter as regards which this Agreement or another Finance Document expressly provides that each Lender's consent is required.

	27.3	Exclusion of other or implied variations.  Except for a document which satisfies the requirements of Clauses 27.1 and 27.2, no document, and no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Creditor Parties or any of them (or any person acting on behalf of any of them) shall result in the Creditor Parties or any of them (or any person acting on behalf of any of them) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising:

	(a)	a provision of this Agreement or another Finance Document; or

	(b)	an Event of Default; or

	(c)	a breach by the Borrowers or a Security Party of an obligation under a Finance Document or the general law; or

	(d)	any right or remedy conferred by any Finance Document or by the general law,

and there shall not be implied into any Finance Document any term or condition requiring any such provision to be enforced, or such right or remedy to be exercised, within a certain or reasonable time.

	27.4	Notification of Variation or Waiver.  No variation or waiver may be made before the date falling ten (10) Business Days after the terms of that variation or waiver have been notified by the Agent to the Lenders, unless each Lender is a FATCA Protected Lender. The Agent shall notify the Lenders reasonably promptly of any variations or waivers proposed by the Borrowers.

	27.5	Variation or Waiver: FATCA.

	(a)	Notwithstanding the foregoing, if the Agent or a Lender reasonably believes that an amendment or waiver may constitute a “material modification” for the purposes of FATCA that may result (directly or indirectly) in a Party being required to make a FATCA Deduction and the Agent or that Lender (as the case may be) notifies the Borrowers and the Agent accordingly, that amendment or waiver may, subject to paragraph (b) below, not be effected without the consent of the Agent or that Lender (as the case may be).

	(b)	The consent of a Lender shall not be required pursuant to paragraph (a) above if that Lender is a FATCA Protected Lender.

	28	NOTICES

	28.1	General.  Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter or fax; and references in the Finance Documents to written notices, notices in writing and notices signed by particular persons shall be construed accordingly.

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	28.2	Addresses for communications.  A notice shall be sent:

	(a)            	to the Borrowers:                                                                      	
c/o Eurobulk Ltd.

4, Messogiou & Evropis Street

151 24, Maroussi

Athens

Greece

Fax No: +30 2111 804097

Attn:  Tassos Aslidis/George Kavalis

	(b)            	to a Lender:                                                                      	At the address below its name in Schedule 1 or (as the case may require) in the relevant Transfer Certificate;

 

	(c)            	
to the Arranger, Account Bank and 

Security Trustee:

	
EUROBANK ERGASIAS S.A.

83, Akti Miaouli Street

185 38 Piraeus

Greece

Fax No: +30 210  4587877;

 

	(d)            	to the Agent:                                                                                    	
EUROBANK ERGASIAS S.A.

83, Akti Miaouli Street

185 38 Piraeus

Greece

Fax: +30 210 4587877

Attn:  Mrs S. Ydreou

 

or to such other address as the relevant party may notify the Agent or, if the relevant party is the Agent or the Security Trustee, the Borrowers, the Lenders, the Arranger, the Account Bank and the Security Parties.

	28.3	Effective date of notices.  Subject to Clauses 28.4 and 28.5:

	(a)	a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered;

	(b)	a notice which is sent by fax shall be deemed to be served, and shall take effect, 2 hours after its transmission is completed.

	28.4	Service outside business hours.  However, if under Clause 28.3 a notice would be deemed to be served:

	(a)	on a day which is not a business day in the place of receipt; or

	(b)	on such a business day, but after 5 p.m. local time;

the notice shall (subject to Clause 28.5) be deemed to be served, and shall take effect, at 9 a.m. on the next day which is such a business day.

 

	28.5	Illegible notices.  Clauses 28.3 and 28.4 do not apply if the recipient of a notice notifies the sender within one hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form which is illegible in a material respect.

65

	28.6	Valid notices.  A notice under or in connection with a Finance Document shall not be invalid by reason that its contents or the manner of serving it do not comply with the requirements of this Agreement or, where appropriate, any other Finance Document under which it is served if,

in the case of incorrect and/or incomplete contents, it should have been reasonably clear to the party on which the notice was served what the correct or missing particulars should have been.

	28.7	English language.  Any notice under or in connection with a Finance Document shall be in English.

	28.8	Meaning of “notice”. In this Clause “notice” includes any demand, consent, authorisation, approval, instruction, waiver or other communication.

	28.9	Electronic communication.

	(a)	Any communication to be made between the Agent and a Lender under or in connection with the Finance Documents may be made by electronic mail or other electronic means, if the Agent and the relevant Lender:

		(i)	agree that, unless and until notified to the contrary, this is to be an accepted form of communication;

		(ii)	notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and

		(iii)	notify each other of any change to their respective addresses or any other such information supplied to them.

	(b)	Any electronic communication made between the Agent and a Lender will be effective only when actually received in readable form and, in the case of any electronic communication made by a Lender to the Agent, only if it is addressed in such a manner as the Agent shall specify for this purpose

	29	SUPPLEMENTAL

	29.1	Rights cumulative, non-exclusive.  The rights and remedies which the Finance Documents give to each Creditor Party are:

	(a)	cumulative;

	(b)	may be exercised as often as appears expedient; and

	(c)	shall not, unless a Finance Document explicitly and specifically states so, be taken to exclude or limit any right or remedy conferred by any law.

	29.2	Severability of provisions.  If any provision of a Finance Document is or subsequently becomes void, unenforceable or illegal, that shall not affect the validity, enforceability or legality of the other provisions of that Finance Document or of the provisions of any other Finance Document.

	29.3	Third party rights.  A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.

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	29.4	Counterparts.  A Finance Document may be executed in any number of counterparts.

	29.5	PATRIOT Act Notice.  Each of the Agent and the Lenders hereby notifies the Borrowers that pursuant to the requirements of the PATRIOT Act and the policies and practices of the Agent and each Lender, the Agent and each of the Lenders is required to obtain, verify and record certain information and documentation that identifies the Borrowers and each Security Party, which information includes the name and address of the Borrowers and each Security Party and such other information that will allow the Agent and each of the Lenders to identify the Borrowers and each Security Party in accordance with the PATRIOT Act.

	30	LAW AND JURISDICTION

	30.1	English law.  This Agreement (and any non-contractual obligations connected with it) shall be governed by, and construed in accordance with, English law.

	30.2	Exclusive English jurisdiction.  Subject to Clause 30.3, the courts of England shall have exclusive jurisdiction to settle any disputes which may arise out of or in connection with this Agreement.

	30.3	Choice of forum for the exclusive benefit of the Creditor Parties.  Clause 30.2 is for the exclusive benefit of the Creditor Parties, each of which reserves the right:

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

	(b)	to commence such proceedings in the courts of any such country or countries concurrently with or in addition to proceedings in England or without commencing proceedings in England.

The Borrowers shall not commence any proceedings in any country other than England in relation to a matter which arises out of or in connection with this Agreement.

	30.4	Process agent. The Borrowers irrevocably appoint Hill Dickinson Services (London) Ltd at their office for the time being, presently at The Broadgate Tower, 20 Primrose Street, London, EC2A 2EW, England, to act as its agent to receive and accept on its behalf any process or other document relating to any proceedings in the English courts which are connected with this Agreement.

	30.5	Creditor Party rights unaffected.  Nothing in this Clause 30 shall exclude or limit any right which any Creditor Party may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction.

	30.6	Meaning of “proceedings”.  In this Clause 30, “proceedings” means proceedings of any kind, including an application for a provisional or protective measure.

AS WITNESS the hands of the duly authorised officers or attorneys of the parties the day and year first before written.

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SCHEDULE 1

 THE LENDERS AND COMMITMENTS

	
Lender

 

	
Lending Office

 

	
Commitment

  

 

	
EUROBANK ERGASIAS S.A.

 

	
83, Akti Miaouli Street

185 38 Piraeus

Greece

Fax No: +30 210 4587877

Attn:  Loans Administration

	
$14,500,000

 

	 	 	 

68

SCHEDULE 2

 DRAWDOWN NOTICE

 

	
To:

	
EUROBANK ERGASIAS S.A.

83, Akti Miaouli

185 38 Piraeus

Greece

 

Attention: [Loans Administration]

[       ] February 2016

DRAWDOWN NOTICE

	1.	We refer to the loan agreement (the “Loan Agreement”) dated [     ] February 2016 and made between (1) ourselves as Borrowers, (2) the Lenders referred to therein and (3) yourselves as Arranger, Account Bank, Agent and as Security Trustee in connection with a secured term loan of up to US$14,500,000. Terms defined in the Loan Agreement have their defined meanings when used in this Drawdown Notice.

	2.	We request to borrow the Loan as follows:

	(a)	Amount: US$[14,500,000];

	(b)	Drawdown Date:  [      ] February 2016;

	(c)	Duration of the first Interest Period shall be [       ] months;

	(d)	Payment instructions: account of [                                 ] and numbered [                        ] with [                 ] of [                       ].

	3.	We represent and warrant that:

	(a)	the representations and warranties in Clause 10 of the Loan Agreement would remain true and not misleading if repeated on the date of this notice with reference to the circumstances now existing;

	(b)	no Event of Default or Potential Event of Default has occurred or will result from the borrowing of the Loan.

	4.	This notice cannot be revoked without the prior consent of the Majority Lenders.

Yours faithfully

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

authorised signatory for

SAF-CONCORD SHIPPING LTD

ETERNITY SHIPPING COMPANY

ALLENDALE INVESTMENTS S.A.

MANOLIS SHIPPING LIMITED

ALTERWALL BUSINESS INC.

AGGELIKI SHIPPING LTD

69

SCHEDULE 3

 CONDITION PRECEDENT DOCUMENTS

PART A

The following are the documents referred to in Clause 9.1(a):

	1.	A duly executed original of this Agreement, the Agency and Trust Deed, the Guarantee, the Accounts Pledge (together with all notices of assignment required thereunder).

	2.	Copies of the certificate of incorporation and constitutional documents of each Borrower, the Guarantor and the Approved Manager, together with up to date evidence of the good standing of each Borrower, the Guarantor and the Approved Manager.

	3.	Originals of resolutions of the directors and shareholders of each Borrower and originals of the relevant minutes containing the resolutions of the directors of the Guarantor and the Approved Manager authorising the execution of each of the Finance Documents referred to at 1 above to which that Borrower is a party and authorising named officers to give the Drawdown Notice and other notices under this Agreement.

	4.	The original of any power of attorney under which any Finance Document referred to at 1 above is executed on behalf of each Borrower, the Guarantor and the Approved Manager.

	5.	Copies of all consents which a Borrower or any Security Party requires to enter into, or make any payment under, any Finance Document.

	6.	All documentation required by the Agent in respect of the Borrowers and any other Security Party pursuant to each Lender’s “Know your customer” requirements, together with such other documents or evidence as the Lenders may reasonably require with respect to money laundering regulations.

	7.	Documentary evidence that the agent for service of process named in Clause 30 of this Agreement has accepted its appointment.

	8.	Favourable legal opinions from lawyers appointed by the Agent on such matters concerning the laws of Liberia and/or of the Marshall Islands and/or of Panama and such other relevant jurisdictions as the Agent may require.

	9.	A certificate in a form and substance satisfactory to the Lenders confirming the legal ownership and the beneficial ownership of the shares in the Borrowers, in a form and substance satisfactory to the Agent in its sole discretion.

	10.	The originals of any mandates or other documents required in connection with the opening and operation of the Operating Account, the Retention Account and the Cash Collateral Deposit Account.

	11.	Receipt by the Agent and the Arranger of all fees due under Clause 20 of this Agreement.

	12.	Evidence that the sum of $2,800,000 is standing to the credit of the Cash Collateral Deposit Account held with the Agent or the Security Trustee or (at the Borrowers’ option) with any of their affiliates outside Greece in the name of either the Borrowers or the Guarantor, by way of cash collateral pursuant to the provisions of Clause 12.5 of this Agreement.

70

	13.	If the Agent so requires, in respect of any of the documents referred to above, a certified English translation prepared by a translator approved by the Agent.

PART B

The following are the documents referred to in Clause 9.1(b):

	1.	In respect of each Ship, a duly executed original of the Mortgage and the Assignment (together with all notices of assignment and acknowledgements required thereunder), together with original resolutions of directors/shareholders and a power of attorney of the Borrowers with respect to the execution of such Finance Documents by the Borrowers.

	2.	Documentary evidence that:

	(a)	each Ship will on the Drawdown Date be definitively and permanently registered in the name of the relevant Borrower under the Approved Flag;

	(b)	each Ship will on the Drawdown Date be in the absolute and unencumbered ownership of the relevant Borrower  save as contemplated by the Finance Documents;

	(c)	each Ship will on the Drawdown Date be classed with the highest available class with Lloyds Register of Ships (or IACS equivalent) free of all overdue recommendations and conditions of such classification society affecting Class;

	(d)	the Mortgage in respect of a Ship has been executed by the relevant Borrower and has been, or will immediately following drawdown of the Loan be, registered against that Ship as a valid first priority ship mortgage in accordance with the laws of the Approved Flag State; and

	(e)	each Ship will on the Drawdown Date be insured in accordance with the provisions of this Agreement and all requirements therein in respect of insurances shall have been complied with.

	3.	Documents establishing that each Ship will, as from the Drawdown Date, be managed by the Approved Manager on terms acceptable to the Agent, together with:

	(a)	the Approved Manager’s Undertaking in respect of the Ships, together with a copy of the ship management agreement for the Ships;

	(b)	the Guarantor’s Undertaking(s)-Assignments in respect of the Ships;

	(c)	copies of the Document of Compliance and Safety Management Certificate and ISSC;

	(d)	copies of such other ISM Code or ISPS Code documentation as the Agent may by written notice to the Borrowers have requested not later than 2 days before the Drawdown Date, certified as true and complete in all material respects by the Borrowers and the Approved Manager.

71

	4.	Valuations of the Ships addressed to the Agent (at the cost and the expense of the Borrowers), prepared in accordance with Clause 15.4 of this Agreement, in a form satisfactory to the Agent.

 

	5.	A favourable opinion from an independent insurance consultant appointed by the Agent on such matters relating to the insurances for the Ships as the Agent may require, and at the cost and expense of the Borrowers.

	6.	Favourable legal opinions from lawyers appointed by the Lenders on such matters concerning the laws of Liberia, the laws of the Marshall Islands, the laws of Panama, the laws of the Approved Flag State (if different) and such other relevant jurisdictions as the Lenders may require.

	7.	Receipt by the Agent of any fees due under Clause 20 of this Agreement.

Every copy document delivered under this Schedule shall be certified as a true and up to date copy by a director or the secretary (or equivalent officer) of the Borrowers.

72

SCHEDULE 4

 TRANSFER CERTIFICATE

The Transferor and the Transferee accept exclusive responsibility for ensuring that this Certificate and the transaction to which it relates comply with all legal and regulatory requirements applicable to them respectively.

	To:	EUROBANK ERGASIAS S.A. for itself and for and on behalf of the Borrowers, each Security Party, the Arranger, the Account Bank, the Agent, the Security Trustee and each Lender, as defined in the Loan Agreement referred to below.

	1.	This Certificate relates to a Loan Agreement (the “Loan Agreement”) dated [.... February 2016 and made between (1) the entities named therein as borrowers (the “Borrowers”), (2) the banks and financial institutions named therein as Lenders, (3) EUROBANK ERGASIAS S.A. as Arranger, Account Bank, Agent and Security Trustee, for a secured term loan of up to US$14,500,000.

	2.	In this Certificate:

“the Relevant Parties” means the Borrowers, each Security Party, the Arranger, the Account Bank, the Agent, the Security Trustee, each Lender;

“the Transferor” means [full name] of [lending office];

“the Transferee” means [full name] of [lending office].

Terms defined in the Loan Agreement shall, unless the contrary intention appears, have the same meanings when used in this Certificate.

	3.	The effective date of this Certificate is [       ] Provided that this Certificate shall not come into effect unless it is signed by the Agent on or before that date.

	4.	The Transferor assigns to the Transferee absolutely all rights and interests (present, future or contingent) which the Transferor has as Lender under or by virtue of the Loan Agreement and every other Finance Document in relation to [    ] per cent of the Contribution outstanding to the Transferor (or its predecessors in title) which is set out below:

	 	
Contribution

	
Amount transferred

	 	 	 
	 	 	 
	 	 	 

	5.	By virtue of this Transfer Certificate and Clause 26 of the Loan Agreement, the Transferor is discharged [entirely from its Commitment which amounts to $[      ]]   [from [    ] per cent. of its Commitment, which percentage represents   $[       ]] and the Transferee acquires a Commitment of $[            ].

	6.	The Transferee undertakes with the Transferor and each of the Relevant Parties that the Transferee will observe and perform all the obligations under the Finance Documents which Clause 26 of the Loan Agreement provides will become binding on it upon this Certificate taking effect.

73

	7.	The Agent, at the request of the Transferee (which request is hereby made) accepts, for the Agent itself and for and on behalf of every other Relevant Party, this Certificate as a Transfer Certificate taking effect in accordance with Clause 26 of the Loan Agreement.

8.            The Transferor:

	(a)	warrants to the Transferee and each Relevant Party:

		(i)	that the Transferor has full capacity to enter into this transaction and has taken all corporate action and obtained all consents which are in connection with this transaction; and

		(ii)	that this Certificate is valid and binding as regards the Transferor;

	(b)	warrants to the Transferee that the Transferor is absolutely entitled, free of encumbrances, to all the rights and interests covered by the assignment in paragraph 4 above;

	(c)	undertakes with the Transferee that the Transferor will, at its own expense, execute any documents which the Transferee reasonably requests for perfecting in any relevant jurisdiction the Transferee's title under this Certificate or for a similar purpose.

9.            The Transferee:

	(a)	confirms that it has received a copy of the Loan Agreement and each other Finance Document;

	(b)	agrees that it will have no rights of recourse on any ground against either the Transferor, the Arranger, the Account Bank, the Agent, the Security Trustee, any Lender in the event that:

		(i)	the Finance Documents prove to be invalid or ineffective,

		(ii)	the Borrowers or any Security Party fail to observe or perform its obligations, or to discharge its liabilities, under the Finance Documents;

		(iii)	it proves impossible to realise any asset covered by a Security Interest created by a Finance Document, or the proceeds of such assets are insufficient to discharge the liabilities of the Borrowers or Security Party under the Finance Documents;

	(c)	agrees that it will have no rights of recourse on any ground against the Arranger, the Account Bank, the Agent, the Security Trustee, any Lender in the event that this Certificate proves to be invalid or ineffective;

	(d)	warrants to the Transferor and each Relevant Party (i) that it has full capacity to enter into this transaction and has taken all corporate action and obtained all official consents which it needs to take or obtain in connection with this transaction; and (ii) that this Certificate is valid and binding as regards the Transferee; and

	(e)	confirms the accuracy of the administrative details set out below regarding the Transferee.

74

	10.	The Transferor and the Transferee each undertake with the Agent and the Security Trustee severally, on demand, fully to indemnify the Agent and/or the Security Trustee in respect of any claim, proceeding, liability or expense (including all legal expenses) which they or either of them may incur in connection with this Certificate or any matter arising out of it, except such as are shown to have been mainly and directly caused by the gross and culpable negligence or dishonesty of the Agent's or the Security Trustee's own officers or employees.

	11.	The Transferee shall repay to the Transferor on demand so much of any sum paid by the Transferor under paragraph 8 above as exceeds one-half of the amount demanded by the Agent or the Security Trustee in respect of a claim, proceeding, liability or expense which was not reasonably foreseeable at the date of this Certificate; but nothing in this paragraph shall affect the liability of each of the Transferor and the Transferee to the Agent or the Security Trustee for the full amount demanded by it.

	
[Name of Transferor]

	 	
[Name of Transferee]

	 	 	 
	
By:

	 	
By:

	 	 	 
	
Date:

	 	
Date:

 

Agent

Signed for itself and for and on behalf of itself

as Agent and for every other Relevant Party

EUROBANK ERGASIAS S.A.

By:

Date:

75

 

Administrative Details of Transferee

Name of Transferee:

Lending Office:

Contact Person

(Loan Administration Department):

Telephone:

Telex:

Fax:

Contact Person

(Credit Administration Department):

Telephone:

Telex:

Fax:

Account for payments:

	Note:	This Transfer Certificate alone may not be sufficient to transfer a proportionate share of the Transferor's interest in the security constituted by the Finance Documents in the Transferor's or Transferee's jurisdiction. It is the responsibility of each Lender to ascertain whether any other documents are required for this purpose.

76

SCHEDULE 5

FORM OF COMPLIANCE CERTIFICATE

 

	
To:

	
EUROBANK ERGASIAS S.A.

83, Akti Miaouli

185 38 Piraeus

Greece

 

Attn:            Loans Administration

[date]                                       

Dear Sirs

Loan Agreement dated [  ] February 2016 (the “Loan Agreement”) made between (i) the Borrowers referred to therein, (ii) the Lenders referred to therein and (iii) EUROBANK ERGASIAS S.A. as Arranger, Account Bank, Agent and Security Trustee in connection with a loan facility of up to $14,500,000.

Terms defined in the Loan Agreement have their defined meanings when used in this Compliance Certificate.

We enclose with this certificate a copy of the audited consolidated annual accounts of the Guarantor referred to in the Loan Agreement (the “Guarantor”) for the financial year ending on 1.12.2015. The accounts (i) have been prepared in accordance with all applicable laws and GAAP consistently applied, (ii) give a true and fair view of the state of affairs of the Guarantor at the date of the accounts and of its profit for the period to which the accounts relate and (iii) fully disclose or provide for all significant liabilities of the Guarantor.

We also enclose copies of the valuations of the Ships which are used in calculating the asset cover ratio under Clause 15.1 of the Loan Agreement as at [            ].

The Borrowers represent that no Event of Default has occurred as at the date of this certificate [(except for the following matter or event [set out all material details of mater or event]).]

We now certify that, as at [           ].

	(a)	a minimum cash balance of $2,800,000 was maintained on the Cash Collateral Deposit Account (free of any Security Interest other than the Account Pledge) throughout the [12] months ending as at the date to which the enclosed accounts are prepared;

	(b)	the asset cover ratio under Clause 15.1 of the Loan Agreement is [        ]%.

We hereby repeat the representations and warranties set out in Clause 10 of the Loan Agreement and confirm that they remain true and correct by reference to the facts and circumstances existing on the date of this Compliance Certificate.

77

This certificate shall be governed by, and construed in accordance with, English law.

Signed

____________________

authorised signatory for

SAF-CONCORD SHIPPING LTD

ETERNITY SHIPPING COMPANY

ALLENDALE INVESTMENTS S.A.

MANOLIS SHIPPING LIMITED

ALTERWALL BUSINESS INC.

AGGELIKI SHIPPING LTD

78

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