Document:

exv10w4

Exhibit 10.4

Dated 6 May 2010

 

MARFIN EGNATIA BANK Societe Anonyme

as Lender

-and-

AUSTRALIA HOLDINGS LTD.

CHINA HOLDINGS LTD.

BRAZIL HOLDINGS LTD.

GRAND RODOSI INC.

NEWLEAD SHIPPING S.A.

and

NEWLEAD BULKERS S.A.

as joint and several Borrowers

 

FINANCIAL AGREEMENT

reducing revolving credit facility not exceeding in aggregate

US$65,280,000 regarding m/vs “AUSTRALIA”,

“CHINA, “BRAZIL” and “GRAND RODOSI”

 

 

 

INDEX

	 	 	 	 	 

	1. PURPOSE
	 	 	1	 
	2. DEFINITIONS
	 	 	1	 
	3. THE FACILITY — THE BORROWERS JOINT AND SEVERAL LIABILITY
	 	 	23	 
	4. AVAILABILITY — DESIGNATED TRANSACTIONS
	 	 	24	 
	5. NOTICE OF DRAWDOWN
	 	 	25	 
	6. INTEREST PERIODS
	 	 	27	 
	7. INTEREST
	 	 	27	 
	8. DEFAULT INTEREST
	 	 	28	 
	9. SUBSTITUTE BASIS
	 	 	28	 
	10. PREPAYMENT
	 	 	29	 
	11. REDUCTION — REPAYMENT
	 	 	34	 
	12. APPLICATION
	 	 	34	 
	13. EVIDENCE OF DEBT
	 	 	35	 
	14. PAYMENTS
	 	 	35	 
	15. CHANGE OF CIRCUMSTANCES
	 	 	36	 
	16. REPRESENTATIONS AND WARRANTIES
	 	 	38	 
	17. SECURITIES
	 	 	42	 
	18. CONDITIONS PRECEDENT
	 	 	43	 
	19. FINANCIAL AND GENERAL UNDERTAKINGS
	 	 	47	 
	20. INSURANCE UNDERTAKINGS
	 	 	51	 
	21. OPERATIONAL UNDERTAKINGS
	 	 	53	 
	22. RETENTION ACCOUNT AND EARNINGS ACCOUNTS
	 	 	59	 
	23. SECURITY COVER
	 	 	60	 
	24. EVENTS OF DEFAULT
	 	 	61	 
	25. SET-OFF
	 	 	64	 
	26. FEES
	 	 	65	 
	27. EXPENSES
	 	 	65	 
	28. INDEMNITY
	 	 	65	 
	29. ENVIRONMENTAL INDEMNITY
	 	 	66	 
	30. STAMP DUTIES
	 	 	66	 
	31. DETERMINATIONS
	 	 	66	 
	32. NO WAIVER
	 	 	66	 
	33. PARTIAL INVALIDITY
	 	 	66	 
	34. TRANSFER, ASSIGNMENT, PARTICIPATION, CHANGE OF LENDING BRANCH
	 	 	67	 
	35. NON-IMMUNITY
	 	 	67	 
	36. NOTICES
	 	 	68	 
	37 SUPPLEMENTAL
	 	 	69	 
	38. LAW AND JURISDICTION
	 	 	69	 
	39. THIS AGREEMENT AND THE OTHER FINANCE DOCUMENTS
	 	 	71	 
	SCHEDULE 1
	 	 	74	 
	FORM OF NOTICE OF DRAWDOWN
	 	 	74	 
	SCHEDULE 2
	 	 	77	 
	FORM OF ACKNOWLEDGEMENT
	 	 	77	 

 

 

THIS AGREEMENT is made the 6th day of May 2010

BETWEEN

	1)	 	MARFIN EGNATIA BANK Societe Anonyme as lender; and
	 
	2)	 	ÁUSTRALIA HOLDINGS LTD., CHINA HOLDINGS LTD., BRAZIL HOLDINGS LTD., GRAND RODOSI INC.,
NEWLEAD BULKERS S.A. and NEWLEAD SHIPPING S.A. as joint and several borrowers.
	 
	1.	 	PURPOSE
	 
	A.	 	This Agreement sets out the terms and conditions on which the Lender has agreed to make
available to the Borrowers as joint and several borrowers a reducing revolving credit
facility, not exceeding at any time the aggregate amount of Sixty Five million Two hundred
Eighty thousand Dollars ($65,280,000) in multiple Advances in the following amounts and for
the following purposes:

	 	(i)	 	an Advance (the “Refinancing Advance A”) in an amount of up to Thirty One
million Dollars ($31,000,000) for the purpose of initially assisting the Existing
Borrowers A in refinancing in full certain existing indebtedness, pursuant to the
Existing Financial Agreement A;
	 
	 	(ii)	 	an Advance (the “Refinancing Advance B”) in an amount of up to Thirty Four
million Two hundred Eighty thousand Dollars ($34,280,000) for the purpose of initially
assisting the Existing Borrowers B in refinancing in full certain existing
indebtedness, pursuant to the Existing Financial Agreement B; and
	 
	 	(iii)	 	Advances (hereinafter called together the “Working Capital Advances” and
singly each a “Working Capital Advance”) in amounts approved by the Lender for the
purpose of providing the Borrowers or any of them with working capital.

	B.	 	The Borrowers and the Lender may enter into Designated Transactions with the Lender pursuant
to the Master Agreement and separate Confirmations.
	 
	2.	 	DEFINITIONS
	 
	2.1	 	In this Agreement the following terms shall have the following meanings, unless the context
otherwise requires:
	 
	 	 	“Accounts” means collectively the Earnings Accounts and the Retention Account and, in the
singular, means any of them;
	 
	 	 	“Accounts’ Charges” means collectively the Earnings Account Charges and the Retention
Account Charge and, in the singular, means any of them;

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	 	 	“Advance” means the principal amount of each borrowing by the Borrowers under this
Agreement (including for the avoidance of doubt each of the Refinancing Advances and the
Working Capital Advances) or, if the context may require, so much thereof as shall for the
time being be outstanding to the Lender hereunder or, as the case may be, the principal
amount of that portion of each borrowing by the Borrowers under this Agreement for which
the Borrowers select an Interest Period of a particular duration and, in the plural, means
all of them;
	 
	 	 	“Applicable Accounting Principles” means those accounting principles, standards and
practices on which preparation of the Financial Statements is based, which are IFRS or US
GAAP and principles and practices adopted by the Corporate Guarantor and its Subsidiaries
at the date hereof or at any time hereafter and notified to and accepted by the Lender;
	 
	 	 	“Applicable Limit” means the maximum amount of the Facility available for drawing hereunder
at any relevant time being on the date hereof Sixty Five million Two hundred Eighty
thousand Dollars ($65,280,000) and being reduced on each of the thirty two (32) Reduction
Dates by the relevant Reduction Instalment referred to in Clause 11.1 and as it may be
further reduced in accordance with Clauses 10.1 and/or 10.3 and/or 10.5 and/or 11.1 and/or
11.2 and/or any other provision of this Agreement;
	 
	 	 	“Applicable Margin” means in relation to each Advance in respect of each Interest Period
applicable to it:

	 	(a)	 	for each Interest Period falling during the period commencing on the Drawdown
Date of the Advance first to occur and ending on the date falling twenty four (24)
months thereafter: three point five per cent (3.5%) per annum;
	 
	 	(b)	 	for each Interest Period on or after such date if the Security Cover:

	 	(i)	 	is equal to or less than One hundred twenty per cent (120%)
the Applicable Margin for the next Interest Period relating to that Advance
commencing after the relevant Security Cover calculation date shall be: Four
point twenty five per cent (4.25%) per annum;
	 
	 	(ii)	 	is equal to or less than One hundred twenty five per cent
(125%) but greater than one hundred twenty per cent (120%) the Applicable Margin
for the next Interest Period relating to that Advance commencing after the
relevant Security Cover calculation date shall be: Four per cent (4%) per annum;
	 
	 	(iii)	 	is equal to or less than One hundred thirty per cent (130%) but
greater than one hundred twenty five per cent (125%) the Applicable Margin for
the next Interest Period relating to that Advance commencing after the relevant
Security Cover calculation date shall be: Three point seventy five per cent
(3.75%) per annum; and

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	 	(iv)	 	is greater than One hundred thirty per cent (130%) the Applicable
Margin for the next Interest Period relating to that Advance commencing after
the relevant Security Cover calculation date shall be: Three point five per cent
(3.5%) per annum.

	 	 	“Approved Brokers” means the insurance brokers appointed by the Borrowers with the
Lender’s prior approval;
	 
	 	 	“Auditors” means any first class firm of international accountants to be approved by the
Lender;
	 
	 	 	“Australia Borrower” means Australia Holdings Ltd., a corporation organised and existing
under the laws of the Republic of Liberia, having its registered office at 80Broad Street,
Monrovia, Republic of Liberia;
	 
	 	 	“Australia Charter” means the time charter dated 2 November 2009 in respect of the
Australia Ship made between the Australia Borrower as owner and the Australia Charterer as
charterer for a period of about twenty two (22) to about twenty four (24) months (about
means plus/minus twenty (20) days in the Australia Charterer’s option) and at a rate of
Twenty One thousand Seven hundred Fifty Dollars ($21,750) per day including overtime, as
the same may from time to time be amended, varied or supplemented, with the Lender’s prior
written consent;
	 
	 	 	“Australia Charterer” means RIZZO BOTTIGLIERI DE CARLINI ARMATORI SPA., of Naples,
Italy;
	 
	 	 	“Australia Earnings Account” means the interest bearing deposit account opened by the
Australia Borrower with the Lender numbered 0315610426 into which all the
Earnings of the Australia Ship are to be paid, in accordance with Clauses 21.2 and 22.7,
such account to include any substitute account or sub-account or revised account or revised
designation or number whatsoever and any deposit account to which monies from the Australia
Earnings Account may from time to time be paid on a time deposit basis;
	 
	 	 	“Australia Ship” means the m.v. “AUSTRALIA”, a bulk carrier vessel, with gross tonnage
of 91,188 tons and net tonnage of 52,901 tons, registered in the ownership of the Australia
Borrower under the laws and the flag of the relevant Flag State;
	 
	 	 	“Availability Period” means in respect of each Advance, the period commencing from the
date of this Agreement and ending on the relevant Termination Date;
	 
	 	 	“Banking Day” means a day on which banks and financial markets are open for business
in Athens, New York and London and any other financial centre which the Lender may deem
appropriate for the operation of the provisions of this Agreement and/or the Master
Agreement;
	 
	 	 	“Bonds” means the $145,000,000 senior unsecured, unlisted and unrated convertible
seven per cent (7%) notes issued by the Corporate Guarantor;

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	 	 	“Borrowers” means together the Australia Borrower, the China Borrower, the Brazil Borrower,
the Rodosi Borrower, the Newlead Shipping Borrower and the Newlead Bulkers Borrower and, in
the singular, means any of them;
	 
	 	 	“Borrowed Money” means Financial 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 Financial Indebtedness of any person falling within any of (i) to (viii) above;
	 
	 	 	“Brazil Borrower” means Brazil Holdings Ltd., a corporation organized and existing under
the laws of the Republic of Liberia, having its registered office at 80 Broad Street,
Monrovia, Liberia;
	 
	 	 	“Brazil Charter” means the time charter dated 20 May 2008 as amended by addenda dated 23
December 2008, 7 January 2009 and 13 August 2009 in respect of the Brazil Ship made between
Grand Nike Pte. Ltd. of Singapore (“Nike”) and TMT as charterer and novated by an addendum
dated 13 August 2009 made by and among Nike, TMT and the Brazil Borrower as owner, for a
period of about six (6) years (about means plus/minus sixty (60) days) and at a daily hire
rate of Thirty One thousand Dollars ($31,000) pro rata gross for the first and second year
and Twenty eight thousand Dollars ($28,000) pro rata gross thereafter, subject to the
condition in the addendum dated 7 January 2009, as the same may be further amended, varied
or supplemented, with the Lender’s prior written consent;
	 
	 	 	“Brazil Earnings Account” means the interest bearing deposit account opened by the Brazil
Borrower with the Lender numbered 0315613422 into which all the Earnings of the Brazil Ship
are to be paid, in accordance with Clauses 21.2 and 22.7, such account to include any
substitute account or sub-account or revised account or revised designation or number
whatsoever and any deposit account to which monies from the Brazil Earnings Account may
from time to time be paid on a time deposit basis;
	 
	 	 	“Brazil Ship” means the m.v. “BRAZIL”, a bulk carrier vessel, with gross tonnage of 77,135
tons and net tonnage of 48,543 tons, registered in the ownership of the Brazil Borrower
under the laws and the flag of the relevant Flag State;
	 
	 	 	“Cash” means free and available negotiable money, orders, cheques and bank balances and
deposits but to exclude (a) any cash that is specifically blocked and charged and (b) cash
standing to the credit of any blocked account and charged to the Lender pursuant to this
Agreement;

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	 	 	“Charters” means together the Australia Charter, the China Charter and the TMT Charters
and, in the singular, means any of them;
	 
	 	 	“Charterers” means collectively the Australia Charterer, the China Charterer and TMT
or, in relation to each Ship, any other charterer of that Ship, which is approved by the
Lender for the purposes of Clause 21.9;
	 
	 	 	“Charter Assignment” means in relation to each Ship, the first priority deed of assignment
of the Charter in respect of that Ship made or, as the context may require, to be made
between the Owner thereof and the Lender in form and substance satisfactory to the Lender
in its sole discretion as the same may from time to time hereafter be amended, varied or
supplemented and, in the plural, means all of them;
	 
	 	 	“China Borrower” means China Holdings Ltd., a corporation organised and existing under the
laws of the Republic of Liberia, having its registered office at 80 Broad Street Monrovia,
Liberia;
	 
	 	 	“China Earnings Account” means the interest bearing deposit account opened by the
China Borrower with the Lender numbered 0315612427 into which all the Earnings of
the China Ship are to be paid, in accordance with Clauses 21.2 and 22.7, such account to
include any substitute account or sub-account or revised account or revised designation or
number whatsoever and any deposit account to which monies from the China Earnings Account
may from time to time be paid on a time deposit basis;
	 
	 	 	“China Ship” means the m.v. “CHINA”, a bulk carrier vessel, with gross tonnage of 73,115
tons and net tonnage of 47,445 tons, registered in the ownership of the China Borrower
under the laws and the flag of the relevant Flag State;
	 
	 	 	“China Charter” means the time charter dated 18 November 2005 as amended by an addendum no.
1 dated 10 March 2006, an addendum no. 2 dated 25 March 2006, an addendum no. 3 dated 2
August 2007, an addendum no. 4 dated 1 October 2007, an addendum no. 5 dated 8 April 2009
and an addendum no. 6 dated 13 August 2009 in respect of the China Ship made between the
China Charterer as charterer and Leon Shipholding Corp. of the Marshall Islands (“Leon”)
and novated by addendum no. 6 dated 13 August 2009 made by and among Leon, the China
Charterer and the China Borrower as owner, for a period of minimum nine (9) years and seven
(7) months up to ten (10) years and six (6) months in China Charterer’s option and at a
daily hire rate of Thirteen thousand Two hundred Fifty Dollars ($13,250) including overtime
as the same may be further amended, varied or supplemented, with the Lender’s prior written
consent;
	 
	 	 	“China Charterer” means DEIULEMAR SHIPPING SOCIETA’ CON UNICO SOCIO S.P.A. of Perugia,
Italy;
	 
	 	 	“Classification Society” means, in respect of each Ship, Bureau Veritas, or such other
classification society member of the IACS, as may be approved in writing by the Lender;

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	 	 	“Commitment Letter” means the letter dated 30 March 2010, issued by the Lender addressed to
the Borrowers and the Corporate Guarantor and accepted by the Corporate Guarantor for and
on behalf of itself and the Borrowers on 30 March 2010;
	 
	 	 	“Compulsory Acquisition” means requisition for title or other compulsory acquisition,
requisition, appropriation, expropriation, deprivation, forfeiture, seizure, capture,
detention or confiscation for any reason of a Ship by any Government Entity or other
competent authority or by pirates, hijackers, terrorists or similar persons whether de
jure or de facto, but shall exclude requisition for use or hire not involving
requisition of title;
	 
	 	 	“Confirmation” in relation to any continuing Designated Transaction, has the meaning given
to it in the Master Agreement;
	 
	 	 	“Control” means in relation to a body corporate:

	 	(a)	 	the power (whether by way of ownership of shares, proxy, contract, agency or
otherwise) to:

	 	(i)	 	cast, or control the casting of, more than fifty per cent
(50%) of the maximum number of votes that might be cast at a general meeting
of such body corporate; or
	 
	 	(ii)	 	appoint or remove all, or the majority, of the directors or
other equivalent officers of such body corporate; or
	 
	 	(ii)	 	give directions with respect to the operating and financial
polices of such body corporate with which the directors or other equivalent
officers of such body corporate are obliged to comply; and/or

	 	(b)	 	the holding beneficially of more than fifty per cent (50%) of the issued share
capital of such body corporate (excluding any part of that issued capital that carries
no right to participate beyond a specified amount in a distribution of either profits
or capital),

	 	 	and “Controlled” shall be construed accordingly;
	 
	 	 	“Corporate Guarantee” means the guarantee and indemnity in respect of the Borrowers’
obligations under this Agreement and the other Finance Documents executed or, as the
context may require, to be executed by the Corporate Guarantor in favour of the Lender in
form and substance satisfactory to the Lender in its sole discretion as the same may from
time to time be amended, varied or supplemented;
	 
	 	 	“Corporate Guarantor” means NewLead Holdings Ltd., a company organized and existing
under the laws of Bermuda, having its registered office at Canon’s Court, 22 Victoria
Street, Hamilton, Bermuda;

6

 

	 	 	“Corporate Security Parties” means those of the Security Parties which are companies or
corporations, but not natural persons and, in the singular, means any of them;
	 
	 	 	“Current Assets” means, at any time in respect of the Group, the amount of current assets
of the Group on a consolidated basis which would be included as current assets in a
consolidated balance sheet of the Group in accordance with US GAAP drawn up at such
time together with such amount of Cash forming part of the Minimum Liquidity and/or any
sums standing to the credit of the Retention Account (but always excluding any current
assets arising from Derivative Financial Instruments) which may be disregarded from the
current assets in a consolidated balance sheet of the Group;
	 
	 	 	“Current Liabilities” means, at any time in respect of the Group, the
amount of current liabilities of the Group on a consolidated basis which would be
included as current liabilities in the consolidated balance sheet of the Group in
accordance with US GAAP drawn up at such time excluding Deferred Revenue and all
current liabilities arising from Derivative Financial Instruments;
	 
	 	 	“Default Rate” means the interest rate referred to in Clause 8.1;
	 
	 	 	“Deferred Revenue” means for the purposes of Clause 19.28, at the relevant time in respect
of the Group, that liability calculated at the time a charter or other employment
arrangement in respect of a Fleet Ship is assumed, by discounting at the Group’s weighted
average cost of capital, the difference between the market charter rate for an equivalent
ship and the assumed charter rate (as set out in the then latest Financial Statements
delivered to the Lender pursuant to Clause 19.1);
	 
	 	 	“Derivative Financial Instruments” means at any time in respect of the Group the fair value
of any Transaction entered into under the Master Agreement and the fair value of any other
derivative financial instruments appearing under this heading (and previously approved by
the Lender) in the consolidated financial statements of the Group provided by the Borrowers
to the Lender in accordance with the provisions of clause 19.1 of this Agreement or
otherwise and in the event of the Corporate Guarantor or any other member of the Group
changing the form or substance of the financial statements (always in accordance with US
GAAP) provided by the Corporate Guarantor or any other member of the Group to the Lender
so that Derivative Financial Instruments no longer appears as a heading and/or such
Derivative Financial Instruments are otherwise accounted for, the determination of what
constitutes Derivative Financial Instruments shall be made by the Lender acting reasonably;
	 
	 	 	“Designated Transaction” means the Existing Transaction and each Transaction which fulfils
the following requirements:

	 	(a)	 	it is entered into by the Borrowers pursuant to, inter alia, the Master
Agreement with the Lender; and

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	 	(b)	 	its purpose is the hedging of the Borrowers’ exposure under this Agreement to
fluctuations in LIBOR arising from the funding of the Facility (or any part thereof)
for a period expiring no later than the final Reduction Date;

	 	 	“Dollars” or “$” means the lawful currency for the time being of the United States of
America;
	 
	 	 	“Drawdown” means the making of an Advance by the Lender to the Borrowers;
	 
	 	 	“Drawdown Date” means, in relation to each Advance, the date requested by the Borrowers for
that Advance to be made available or (as the context requires) the date on which that
Advance is actually made available;
	 
	 	 	“Early Termination Date” in relation to any continuing Designated Transaction, shall have
the meaning given to it in the Master Agreement;
	 
	 	 	“Earnings” means in relation to each Ship all freight, hire, passage monies and any
other amounts whatsoever which may at any time be earned by or become payable to or for the
account of the Owner of that Ship or its agents arising out of or as a result of the
ownership, possession, management and/or operation of that Ship by the Owner thereof or its
agents or under any charter (including, without limitation, each Charter), contract or
carriage or other contract (including a salvage or towage contract) for the use, operation
or management of that Ship, all payments for any variation of any such contract and all
damages for any breach of any such contract, all general average and salvage remuneration
and all compensation for requisition for hire;
	 
	 	 	“Earnings Account Charge” means in relation to each Earnings Account the first priority
assignment, pledge and charge executed or, as the context may require, to be executed by
the relevant Owner in favour of the Lender in form and substance satisfactory to the Lender
as the same may from time to time hereafter be amended, varied or supplemented and, in the
plural, means all of them;
	 
	 	 	“Earnings Account” means in relation to:

	 	(a)	 	the Australia Ship, the Australia Earnings Account;
	 
	 	(b)	 	the China Ship, the China Earnings Account;
	 
	 	(c)	 	the Brazil Ship, the Brazil Earnings Account; and
	 
	 	(d)	 	the Rodosi Ship, the Rodosi Earnings Accounts,

	 	 	and, in the plural, means all of them;
	 
	 	 	“EBITDA” means, in respect of any period, the consolidated profit on ordinary activities of
the Group before Taxation for such period:

8

 

	 	(a)	 	adjusted to exclude Interest Receivable and Interest Payable and other
similar income or costs to the extent not already excluded;
	 
	 	(b)	 	adjusted to exclude any gain or loss realised on the disposal of fixed assets
(whether tangible or intangible);
	 
	 	(c)	 	after adding back depreciation and amortisation;
	 
	 	(d)	 	adjusted to exclude any exceptional or extraordinary costs or income;
	 
	 	(e)	 	after deducting any profit arising out of the release of any provisions
against a liability or charge (excluding in this context the release of any provisions
against liabilities or charges relating to exceptional or extraordinary items);

	 	 	“Encumbrance” means a mortgage, pledge, lien, charge (whether fixed or floating),
assignment, hypothecation, security interest, title retention, preferential right or trust
arrangement and any other security agreement or arrangement whether now existing or arising
in the future on the assets or revenue of the Borrowers or any of them or any other
Security Party other than a pledge or lien arising by operation of law;
	 
	 	 	“Environmental Approvals” means any permit, licence, approval, ruling, certification,
exemption or other authorisation relating to the Ships or any of them required under
applicable Environmental Laws;
	 
	 	 	“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 Relevant Ship; or
	 
	 	(b)	 	any incident in which Environmentally Sensitive Material is released from a
vessel other than a Relevant Ship and which involves a collision between a Relevant
Ship and such other vessel or some other incident of navigation or operation, in
either case, in connection with which a Relevant Ship is actually or potentially
liable to be arrested, attached, detained or injuncted and/or a Relevant Ship and/or
any owner

9

 

	 	 	 	and/or any other operator or manager thereof is 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 Relevant Ship and in connection with which any Relevant Ship is
actually or potentially liable to be arrested and/or where any owner and/or any
operator or manager of any Relevant Ship is 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;
	 
	 	 	“Equity Ratio” means Shareholders’ Equity as a percentage of Total Assets adjusted, in
each case for the difference between Fleet Market Value and Fleet Book Value
	 
	 	 	“Euro” and “€” means the single currency of member states of the European Union introduced
in accordance with the provisions of Article 109 (i) of the Treaty of Rome of
25th March 1957 as amended by the Single European Act 1986 and the Maastricht
Treaty (which was signed on 7th February 1992 and came into force on
1st November 1993) as amended, varied or supplemented from time to time;
	 
	 	 	“Event of Default” means any event referred to in Clause 24;
	 
	 	 	“Excess Risks” means, in relation to each Ship the proportion of claims for general average
and salvage charges and under the ordinary running-down clause, which is not recoverable in
consequence of the value at which that Ship is assessed for the purpose of such claims
exceeding her insured value;
	 
	 	 	“Existing Borrowers A” means together the Rodosi Borrower, the Newlead Shipping Borrower
and the Newlead Bulkers Borrower and, in the singular, means any of them;
	 
	 	 	“Existing Borrowers B” means together the Australia Borrower, the Brazil Borrower and the
China Borrower and, in the singular, means any of them;
	 
	 	 	“Existing Financial Agreement A” means the financial agreement dated 31 March 2010 made by
and among the Lender as lender and the Existing Borrowers A as joint and several borrowers
pursuant to which the Lender made available to the Existing Borrowers A a revolving credit
facility of up to Thirty Five million Dollars ($35,000,000) for the purposes and under the
terms and conditions therein set forth;
	 
	 	 	“Existing Financial Agreement B” means the financial agreement dated 18 August 2009 made by
and among the Lender as lender and the Existing Borrowers B as joint and

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	 	 	several borrowers pursuant to which the Lender made available to the Existing Borrowers B a
reducing revolving credit facility of up to Thirty Seven million Four hundred thousand
Dollars ($37,400,000) for the purposes and under the terms and conditions therein set
forth;
	 
	 	 	“Existing Master Agreement” means the master swap agreement (on the 2002 ISDA Master
Agreement (Multicurrency-Crossborder) form) and Schedule thereto both dated as of 18 August
2009 and made between the Existing Borrowers B and the Lender and includes, inter alia, the
Existing Transaction;
	 
	 	 	“Existing Transaction” means a transaction entered into by the Existing Borrowers B and the
Lender under the Existing Master Agreement, as evidenced by the Old Confirmation as the
same shall be or has been novated pursuant to the Novation Confirmation;
	 
	 	 	“Facility” means a reducing revolving credit facility in an amount of up to Sixty Five
million Two hundred Eighty thousand Dollars ($65,280,000) to be made available to the
Borrowers by the Lender in multiple Advances pursuant to the terms of Clause 1(A) and
Clause 3 or, if the context may so require, so much thereof as shall for the time being be
outstanding to the Lender hereunder;
	 
	 	 	“Fair Market Value” means, in relation to each Fleet Ship, the fair market value of such
Fleet Ship determined in accordance with Clause 21.26;
	 
	 	 	“Finance Documents” means:

	 	(a)	 	this Agreement;
	 
	 	(b)	 	the Master Agreement;
	 
	 	(c)	 	the Security Documents; and
	 
	 	(d)	 	any other document (whether creating an Encumbrance or not) which is
executed at any time by any Security Party 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 Lender under this Agreement and/or the Master Agreement or any
of the documents referred to in this definition or in any other Clause of this
Agreement;

	 	 	“Financial Indebtedness” means any obligation for the payment or repayment of money,
whether as principal or as surety and whether present or future, actual or contingent;
	 
	 	 	“Financial Quarter” means each period of approximate three (3) months commencing on the
day after a Financial Quarter Day and ending on the next following Financial Quarter Day;
	 
	 	 	“Financial Quarter Day” means 31 March, 30 June, 30 September and 31 December in any year;

11

 

	 	 	“Financial Statements” means the audited by the Auditors or unaudited annual or
quarterly financial statements of the Group, referred to in Clause 19.1 comprising in each
case of a statement of income, balance sheet, cash flow statement and relative notes;
	 
	 	 	“Flag State” means in relation to each Ship, the Republic of Liberia or, in each case, any
other flag state which shall be acceptable to the Lender in its sole discretion;
	 
	 	 	“Fleet Book Value” means, at the end of a Relevant Period, the aggregate book value of the
Fleet Ships less depreciation as stated in the most recent Financial Statements delivered
pursuant to Clause 19.1;
	 
	 	 	“Fleet Market Value” means, at the date of calculation, the aggregate of the Fair Market
Values of all of the Fleet Ships as last determined in accordance with Clause 21.26;
	 
	 	 	“Fleet Ships” means all the vessels (including, but not limited, to the Ships) from time to
time wholly owned by the Corporate Guarantor or any other members of the Group and, in
the singular, means any of them;
	 
	 	 	“General Assignment” means, in relation to each Ship, the first priority deed of
assignment relative to the Insurances, the Earnings and the Requisition Compensation of
that Ship made or, as the context may require, to be made by and between the Owner of that
Ship and the Lender in form and substance satisfactory to the Lender as the same may from
time to time hereafter be amended, varied or supplemented;
	 
	 	 	“Government Entity” means and includes (whether having a distinct legal personality or not)
any national or local government authority, board, commission, department, division, organ,
instrumentality, court or agency or tribunal and any association, organisation or
institution of which any of the foregoing is a member or to whose jurisdiction any of the
foregoing is subject or in whose activities any of the foregoing is a participant;
	 
	 	 	“Group” means the Corporate Guarantor and its Subsidiaries (whether direct or indirect
and including without limitation the Borrowers) from time to time during the Security
Period and “members of the Group” shall be construed accordingly;
	 
	 	 	“IFRS” means international accounting reporting standards within the meaning of the IAS
Regulations 1606/2002 to the extent applicable to the relevant Financial Statements;
	 
	 	 	“Indebtedness” means any and all moneys, liabilities and obligations (whether actual or
contingent, whether existing or hereafter arising, whether or not for the payment of money,
and including, without limitation, the Master Agreement Liabilities and any obligation or
liability to pay damages) which are now or which may at any time and from time to time
hereafter be due, owing, payable or incurred or expressed to be due, owing, payable or
incurred from the Borrowers or any of them (whether as principal, surety or otherwise) to
the Lender under this Agreement, the Master Agreement and the other Finance Documents;

12

 

	 	 	“Insurance Documents” means all slips, cover notes, contracts, policies, certificates
of entry or other insurance documents evidencing or constituting the Insurances from time
to time in effect;
	 
	 	 	“Insurances” means, collectively in relation to each Ship, all policies and contracts
of insurance (which expression includes all entries of that Ship in a protection and
indemnity or mutual hull or war risks association) or such other arrangements by way of
insurance which are from time to time taken out or entered into in respect of or in
connection with that Ship and/or its Earnings and including all benefits thereof including
all claims of whatsoever nature and return of premiums;
	 
	 	 	“Insurers” means the underwriters, insurance companies, mutual insurance associations
with or by which the Insurances are effected;
	 
	 	 	“Interest Determination Date” means for the purpose of calculating and determining the
Interest Rate the Banking Day which is two (2) Banking Days prior to the commencement of an
Interest Period provided however that in case of any Interest Periods exceeding three (3)
months the Lender shall be entitled to recalculate the Applicable Margin and consequently
the whole Interest Rate on the date falling three (3) months after the commencement of such
Interest Period and on each subsequent date falling at quarterly intervals thereafter
during such Interest Period and each such date shall be considered as an “Interest
Determination Date” for the purposes of this Agreement;
	 
	 	 	“Interest Payable” means, in respect of any period, the aggregate (calculated on a
consolidated basis) of:

	 	(a)	 	the amounts charged and posted (or estimated to be charged and posted) as a
current accrual accrued during such period in respect of members of the Group by way
of Interest on all Borrowed Money, but excluding any amount accruing as interest
in-kind (and not as cash pay) to the extent capitalised as principal during such
period; and
	 
	 	(b)	 	net payments in relation to interest rate or currency hedging arrangements in
respect of Borrowed Money (after deducting net income in relation to such interest
rate or currency hedging arrangements);

	 	 	“Interest Payment Date” means each day on which interest is payable in accordance with
Clause 7, provided that if any such day is not a Banking Day, the relevant Interest Payment
Date shall be the next succeeding day which is a Banking Day, unless such next succeeding
Banking Day falls into another calendar month, in which event, the relevant Interest
Payment Date shall be the immediately preceding Banking Day;
	 
	 	 	“Interest Period” means, for each Advance, each of the successive periods determined
in accordance with Clause 6 of this Agreement during which such Advance or any part thereof
is outstanding and for which an Interest Rate in respect thereof is to be established
hereunder;

13

 

	 	 	“Interest Rate” means for each Advance (save as provided in Clause 9) the rate of
interest applicable to that Advance (or any part thereof) during each Interest Period in
respect thereof which is/are conclusively certified by the Lender to the Borrowers to be
the aggregate of (a) the relevant Applicable Margin and (b) LIBOR or the Lender’s cost of
funding the relevant Advance, for Interest Periods of longer than six (6) months;
	 
	 	 	“Interest Receivable” means, in respect of any period, the amount of Interest accrued
on cash balances of the Group (including the amount of interest accrued on the Earnings
Accounts, to the extent that the account holder is entitled to receive such interest)
during such period;
	 
	 	 	“ISM Code” means, in relation to its application to the Manager, the Owners, each Ship and
her operation:

	 	(a)	 	‘The International Management Code for the Safe Operation of Ships and for
Pollution Prevention’, currently known or referred to as the ‘ISM Code’, adopted by
the Assembly of the International Maritime Organisation by Resolution A.741(18) on 4
November 1993 and incorporated on 19 May 1994 into chapter IX of the International
Convention for the Safety of Life at Sea 1974 (SOLAS 1974); and
	 
	 	(b)	 	all further resolutions, circulars, codes, guidelines, regulations and
recommendations which are now or in the future issued by or on behalf of the
International Maritime Organisation or any other entity with responsibility for
implementing the ISM Code, including without limitation, the ‘Guidelines on
implementation or administering of the International Safety Management (ISM) Code by
Administrations produced by the International Maritime Organisation pursuant to
Resolution A.788(19) adopted on 25 November 1995,

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

	 	(a)	 	the document of compliance (DOC) and safety management certificate (SMC)
issued pursuant to the ISM Code in relation to that Ship within the periods specified
by the ISM Code; and
	 
	 	(b)	 	all other documents and data which are relevant to the ISM SMS and its
implementation and verification which the Lender may require; and
	 
	 	(c)	 	any other documents which are prepared or which are otherwise relevant to
establish and maintain compliance of such Ship or the compliance of the relevant Owner
and/or the Manager with the ISM Code which the Lender may require;

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

14

 

	 	 	“ISPS Code” means the International Ship and Port Facility Security Code adopted by the
International Maritime Organization Assembly as the same may have been or may be amended or
supplemented from time to time;
	 
	 	 	“ISPS Code Documentation” includes in relation to each Ship:

	 	(a)	 	the International Ship Security Certificate issued pursuant to the ISPS Code
in relation to that Ship within the periods specified by the ISPS Code; and
	 
	 	(b)	 	all other documents and data which are relevant to the ISPS Code and its
implementation and verification which the Lender may require;

	 	 	“Lender” means Marfin Egnatia Bank Societe Anonyme, a company duly incorporated under the
laws of the Republic of Greece, having its registered office at 20 Mitropoleos and
Komninon, 546 24 Thessaloniki, Greece and acting in this case through its office at 91 Akti
Miaouli, 185 38 Piraeus, Greece and shall include its successors and assigns;
	 
	 	 	“LIBOR” means, for an Interest Period:

	 	(a)	 	the rate per annum equal to the offered quotation for deposits in Dollars for
a period equal to, or as near as possible equal to, the relevant Interest Period which
appears on the appropriate page of the Reuters Monitor Money Rates Service at or about
11.00 a.m. (London time) on the Interest Determination Date for that Interest Period
(or on such other service as may be nominated by the British Bankers’ Association as
the information vendor for the purpose of displaying British Bankers’ Association
Interest Settlement Rates for Dollars); or
	 
	 	(b)	 	if no rate is quoted on the appropriate page of the Reuters Monitor Money
Rates Service, the rate per annum determined by the Lender to be the arithmetic mean
(rounded upwards, if necessary, to the nearest one-sixteenth of one per cent) of the
rates per annum at which deposits in Dollars are offered to the Lender by leading
banks in the London Interbank Market at the Lender’s request at or about 11.00 a.m.
(London time) on the Interest Determination Date for that Interest Period for a period
equal to that Interest Period and for delivery on the first Banking Day of it;

	 	 	“Loan Account” means collectively the account or accounts maintained by the Lender
referred to in Clause 13;
	 
	 	 	“Major Casualty” means, in relation to each Ship, any casualty to such 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 Three hundred thousand Dollars ($300,000)
or the equivalent thereof in any other currency;
	 
	 	 	“Management Agreement” means, in relation to each Ship, the management agreement made
or to be made between the Owner thereof and the Manager, in form and substance

15

 

	 	 	satisfactory to the Lender and as the same may from time to time be amended, varied or
supplemented with the Lender’s prior written consent;
	 
	 	 	“Manager” means Newlead Bulkers S.A., a corporation organized and existing under the
laws of the Republic of Liberia, having its registered office at 80 Broad Street, Monrovia,
Liberia and an office established in Greece under Greek Law 89/67 (as amended) at 1-7
Flessa Street & 83 Akti Miaouli, Piraeus, Greece, or any other company approved by the
Lender as manager of the Ships or any of them;
	 
	 	 	“Manager’s Undertaking” means, in relation to each Ship, a letter of undertaking
including, where appropriate, an assignment of any obligatory insurances executed or, as
the context may require, to be executed by each Manager in favour of the Lender, in such
terms as the Lender may approve or require and, in the plural, means all of them;
	 
	 	 	“Market Value” means in respect of each Ship, the value thereof determined in accordance
with the provisions of Clause 21.26;
	 
	 	 	“Master Agreement” means the master swap agreement (on the 2002 ISDA Master Agreement
(Multicurrency-Crossborder) form) and Schedule thereto both made or as the context may
require to be made between the Borrowers and the Lender and includes all Designated
Transactions from time to time entered into and Confirmations from time to time exchanged
thereunder;
	 
	 	 	“Master Agreement Assignment” means in relation to the Master Agreement, the
assignment of that Master Agreement in favour of the Lender, executed or, as the context
requires, to be executed by the Borrowers in form and substance satisfactory to the Lender
in its sole discretion as security for the Indebtedness, as the same may from time to time
be amended, varied or supplemented;
	 
	 	 	“Master Agreement Liabilities” means at any relevant time all liabilities actual or
contingent, present or future of the Borrowers to the Lender under the Master Agreement;
	 
	 	 	“Maximum Permitted Swap Exposure” an amount not exceeding the lesser of Six million Five
hundred Twenty Eight thousand Dollars ($6,528,000) and ten per cent (10%) of the, at any
time, outstanding principal amount of the Facility;
	 
	 	 	“Minimum Liquidity” means an amount of Cash equal to five per cent (5%) of the, at any
time, outstanding amount of the Facility;
	 
	 	 	“Mortgage” means, in relation to each Ship, the first preferred Liberian mortgage granted
or, as the context may require, to be granted by the Owner of that Ship to the Lender to
secure the due payment of the Indebtedness in form and substance satisfactory to the Lender
as the same may from time to time hereafter be amended, varied or supplemented, and, in the
plural, means all of them;

16

 

	 	 	“Mortgaged Ship” means at any relevant time a Ship, which is at such time subject to a
Mortgage and/or its Earnings, Insurances and Requisition Compensation of which are subject
to an Encumbrance pursuant to the relevant Security Documents and a Ship shall, for the
purposes of this Agreement, be regarded as a Mortgaged Ship as from the date on which the
Mortgage of that Ship has been executed and registered in accordance with this Agreement
until whichever shall be the earlier of (i) the payment in full of the amount required to
be paid to the Lender, pursuant to Clause 10.1 following the Total Loss or sale or
discharge of Mortgage respectively of such Ship and (ii) the end of the Security Period;
	 
	 	 	“Nasdaq” means the National Association of Securities Dealers Automated Quotation;
	 
	 	 	“Newlead Bulkers Borrower” means Newlead Bulkers S.A., a corporation organized and existing
under the laws of the Republic of Liberia, having its registered office at 80 Broad Street,
Monrovia, Liberia;
	 
	 	 	“Newlead Shipping Borrower” means Newlead Shipping S.A., a corporation organized and
existing under the laws of the Republic of Panama, having its resident agent’s address at
HSBC Building, Samuel Lewis Avenue, Panama, Republic of Panama;
	 
	 	 	“Nomination Date” means the Banking Day which is three (3) Banking Days prior to the
commencement of an Interest Period;
	 
	 	 	“Notice of Drawdown” means each written notice given by the Borrowers to the Lender
pursuant to Clause 5.1.4 substantially in the form set out in Schedule 1 hereto;
	 
	 	 	“Novation Confirmation” means, in respect of the Existing Transaction, a Confirmation made,
or as the context may require, to be made by and among the Existing Borrowers B as
transferors, the Borrowers as transferees and the Lender as remaining party, whereby all
the rights, liabilities, duties and obligations of the Existing Borrowers B to the Lender
under the Old Confirmation are transferred by novation to the Borrowers as joint and
several obligors, in form and substance satisfactory to the Lender in its sole discretion;
	 
	 	 	“Old Confirmation” means a confirmation in respect of the Existing Transaction dated 2
September 2009 made between the Existing Borrowers B and the Lender under the Existing
Master Agreement;
	 
	 	 	“Participating Member State” means any member state of the European Communities that adopts
or has adopted the Euro as its lawful currency in accordance with the legislation of
the European Community relating to economic and monetary union;
	 
	 	 	“Owner” means, in relation to:

	 	(a)	 	the Australia Ship, the Australia Borrower;
	 
	 	(b)	 	the Brazil Ship, the Brazil Borrower;
	 
	 	(c)	 	the China Ship, the China Borrower; and

17

 

	 	(d)	 	the Rodosi Ship, the Rodosi Borrower,

	 	 	and, in the plural, means all of them;
	 
	 	 	“Permitted Liens” means any supplier’s, carrier’s, workman’s or similar lien arising in the
ordinary course of business automatically by statute or by operation of law and not by way
of contract in respect of amounts not yet due and payable but excluding any lien arising
from any default or omission of the Security Parties or any of them;
	 
	 	 	“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 an Encumbrance created by
the company must or should be registered in order to ensure its validity or priority;
and
	 
	 	(f)	 	a country the courts of which have jurisdiction to make a winding up,
administration or similar order in relation to the company or which would have such
jurisdiction if their assistance were requested by the courts of a country referred to
in paragraphs (b) or (c) above;

	 	 	“Protection and Indemnity risks” means the usual risks covered by a protection and
indemnity association that is a member of the International Group of Protection and
Indemnity Associations, including the proportion not otherwise recoverable in case of
collision under the ordinary running-down clause;
	 
	 	 	“Reduction Date” means the date falling three (3) months from the Drawdown Date of the
Advance first to occur and each of the thirty one (31) dates falling at successive
quarterly intervals thereafter throughout the Security Period, on each of which dates the
amount of the Facility available hereunder shall be reduced in accordance with Clause 11.1
provided that if any such day is not a Banking Day the relevant Reduction Date shall be the
next succeeding day which is a Banking Day unless such next succeeding Banking Day falls in
another calendar month in which event the relevant Reduction Date shall be the immediately
preceding Banking Day;
	 
	 	 	“Reduction Instalments” means, collectively the thirty two (32) consecutive quarterly
instalments, the first twelve (12) such instalments being in the amount of One million
Eight hundred Eighty Five thousand Dollars ($1,885,000) each and the succeeding twenty
(20) such instalments being in the amount of Two million One hundred Thirty Three thousand

18

 

	 	 	Dollars ($2,133,000) each, the first such instalment being due and payable on the first
Reduction Date and each subsequent instalment being due and payable on each Reduction Date
falling at successive quarterly intervals thereafter; provided that if the Facility drawn
down is less than Sixty Five million Two hundred Eighty thousand Dollars ($65,280,000) then
the Reduction Instalments shall be reduced proportionately;
	 
	 	 	“Refinancing Advance A” shall have the meaning ascribed to it in Clause 1A(i);
	 
	 	 	“Refinancing Advance B” shall have the meaning ascribed to it in Clause 1(A)(ii);
	 
	 	 	“Refinancing Advances” means, together, the Refinancing Advance A and the Refinancing
Advance B and, in the singular, means either of them;
	 
	 	 	“Relevant Period” means each rolling period of twelve (12) months ending on a Financial
Quarter;
	 
	 	 	“Relevant Ship” means each Ship and any other ship from time to time owned, managed or
crewed by, or demise or bareboat chartered to a Borrower, the Manager or any other member
of the Group;
	 
	 	 	“Retention Account” means the account numbered 0345936426 opened in the joint names of the
Borrowers with the Lender pursuant to Clause 22.1 such account to include any
substitute account or sub-account or revised account or revised designation or number
whatsoever, and any deposit account to which monies from the Retention Account may from
time to time be paid on a time deposit basis;
	 
	 	 	“Retention Account Charge” means the first priority assignment, pledge and charge executed
or, as the context may require, to be executed by the Borrowers in favour of the Lender on
the Retention Account in form and substance satisfactory to the Lender as the same may from
time to time be amended, varied or supplemented;
	 
	 	 	“Requisition Compensation” means all compensation payable by reason of any Compulsory
Acquisition of a Ship;
	 
	 	 	“Rodosi Borrower” means Grand Rodosi Inc., a corporation organized and existing under the
laws of the Republic of Liberia, having its registered office at 80 Broad Street, Monrovia,
Republic of Liberia;
	 
	 	 	“Rodosi Earnings Accounts” means collectively the interest bearing deposit accounts opened
by the Rodosi Borrower, numbered 0169089429, 0338786425, 0169091427 and 0338788426 into
which all the Earnings of the Rodosi Ship are to be paid, in accordance with Clauses 21.2
and 22.7, each such account to include any substitute account or sub-account or revised
account or revised designation or number whatsoever and any deposit account to which monies
from any Rodosi Earnings Account may from time to time be paid on a time deposit basis and,
in the singular, means any of them ;

19

 

	 	 	“Rodosi Charter” means the time charter in respect of the Rodosi Ship dated 7 January 2009
made between the Rodosi Borrower as owner and TMT as charterer for a period of about three
(3) years (about means sixty (60) days plus/minus in TMT’s option) and at a minimum net
daily hire rate of Ten thousand Two hundred Dollars ($10,200), as the same may from time to
time be amended, varied or supplemented, with the Lender’s prior written consent;
	 
	 	 	“Rodosi Ship” means the m.v. “GRAND RODOSI”, a bulk carrier vessel, with gross tonnage
of 37,519 tons and net tonnage of 22,604 tons, registered in the ownership of the Rodosi
Borrower, under the relevant Flag State;
	 
	 	 	“SEC” means the U.S. Securities and Exchange Commission;
	 
	 	 	“Security Cover” means the aggregate of the Market Values of each Mortgaged Ship plus any
amounts in respect of principal standing to the credit of the Retention Account and the net
realisable value of any additional security previously provided in respect of the
Indebtedness under Clause 23 to the aggregate amount of (i) the Facility and (ii) the Swap
Exposure;
	 
	 	 	“Security Documents” means collectively the Mortgages, the General Assignments, the
Charter Assignments, the Corporate Guarantee, the Manager’s Undertakings, the Master
Agreement Assignment and the Accounts’ Charges and where the context so admits this
Agreement and the Master Agreement and any other agreement or document that may be executed
at any time by the Borrowers, the other Security Parties or any other person as security
for the due payment of the Indebtedness;
	 
	 	 	“Security Parties” means each party to the Finance Documents (other than the Lender
and the Charterers) and, in the singular, means any of them;
	 
	 	 	“Security Period” means the period during which the Finance Documents remain in effect
and ending when the Indebtedness is paid in full;
	 
	 	 	“Shareholders Equity” means, at any time in respect of the Group, the amount of
shareholders equity of the Group on a consolidated basis which would be included as
shareholders equity in the consolidated balance sheet of the Group in accordance with US
GAAP drawn up at such time;
	 
	 	 	“Ships” means together the Australia Ship, the Brazil Ship, the China Ship and the Rodosi
Ship and, in the singular, means any of them;
	 
	 	 	“Subject Documents” means all of the Finance Documents, the Charters and the Management
Agreements (none to be amended, varied, supplemented or modified without the consent of the
Lender), and together with any other instrument, document or memorandum, scheduled to any
of the documents referred to above, and any notice, consent to acknowledgement referred to
in or required pursuant to any of the documents referred to above and any document,
instrument or memorandum which secures any of the

20

 

	 	 	obligations of the Borrowers under any of the Finance Documents or under any other Subject
Document;
	 
	 	 	“Subsidiary” of a person means: (a) any other person directly or indirectly Controlled
by that person; or (b) any other person whose dividends or distributions on ordinary voting
share capital that person is entitled to receive more than fifty per cent (50%); or (c) any
entity (whether or not so Controlled) treated as a Subsidiary in the financial statements
of that person from time to time;
	 
	 	 	“Swap Exposure” means, as at any relevant date the amount certified by the Lender (whose
certificate shall in the absence of manifest error be conclusive and binding on the
Borrowers) to be the aggregate net amount in Dollars which would be payable by the
Borrowers to the Lender under (and calculated in accordance with) section 6(e) (Payments on
Early Termination) of the Master Agreement if an Early Termination Date had occurred on the
relevant date in relation to all continuing Designated Transactions;
	 
	 	 	“Taxes” means all present and future taxes, levies, imposts, duties, charges, fees,
deductions and withholdings, and any restrictions or conditions resulting in a charge
(other than taxes on the overall net income of the Lender) and “Tax” and “Taxation” shall
be construed accordingly;
	 
	 	 	“Termination Date” means (i) for each Refinancing Advance 15 May 2010 and (ii) for each
Working Capital Advance the date falling one (1) month prior to the last Reduction Date or,
in each case, such later date(s) as the Lender may approve in writing;
	 
	 	 	“TMT” means TMT Bulk Corp. of Taipei, Taiwan;
	 
	 	 	“TMT Charters” means together the Brazil Charter and the Rodosi Charter and, in the
singular, means either of them;
	 
	 	 	“Total Assets” means at any time in respect of the Group, the amount of total assets of
the Group on a consolidated basis which would be included as total assets in a
consolidated balance sheet of the Group in accordance with US GAAP drawn up at such
time;
	 
	 	 	“Total Loss” means in relation to each Ship:

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

21

 

	 	 	 	capture, seizure, arrest, detention or confiscation within thirty (30) days after
the occurrence thereof or such lesser period provided in such Ship’s War Risks
Insurances;

	 	 	“Transaction” has the meaning given to it in the Master Agreement;
	 
	 	 	“US GAAP” means generally accepted accounting principles adopted in the United States;
	 
	 	 	“War Risks” includes all risks referred to in the Institute Time Clauses (Hulls)
(1/10/83) and (1/11/95) including, but not limited to, the risk of mines, blocking and
trapping, missing vessel, confiscation 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);
	 
	 	 	“Working Capital Advance” shall have the meaning ascribed to it in Clause 1(A)(iii) ;and
	 
	 	 	“Working Capital” means for the purposes of Clause 19.28 Current Assets less Current
Liabilities (excluding at any given time, (a) the current portion of long -term debt
maturing within twelve (12) months and (b) non-cash current liabilities of the Group on a
consolidated basis which would be included as non cash liabilities in the consolidated
balance sheet of the Group in accordance with US GAAP drawn up at such time in relation to
Deferred Revenue).

	2.2	 	In this Agreement clause headings are for ease of reference only and shall be disregarded in
the construction of this Agreement.
	 
	2.3	 	In this Agreement unless the context otherwise requires:
	 
	2.3.1	 	words importing the singular number shall include the plural and vice versa;
	 
	2.3.2	 	fees, costs and expenses shall be exclusive of any value added tax or similar tax (if any)
which shall accordingly be payable in addition;
	 
	2.3.3	 	any reference to a document or instrument is a reference to that document or instrument as
the same may have been, or may from time to time be amended or supplemented;
	 
	2.3.4	 	the liquidation, winding-up or dissolution of a company or body corporate or the appointment
of a receiver, administrative receiver, manager or administrator of or in relation to a
company or corporation or any of its assets shall be construed so as to include any equivalent
or analogous proceedings under the laws of the jurisdiction in which it is incorporated or any
jurisdiction in which it carries on business or has assets or liabilities;
	 
	2.3.5	 	references to persons include any individual, partnership, firm, trust, body corporate,
government, governmental body, authority, agency, unincorporated body of persons or
association;

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	2.3.6	 	a reference to any enactment or statutory provision include any enactment or statutory
provision which amends, extends, consolidates or replaces the same or which has been amended,
extended, consolidated or replaced by the same and shall include any orders, regulations,
codes of practice, instruments or other subordinated legislation made under the relevant
enactment or statutory provision; and
	 
	2.3.7	 	the words “herein”, “hereto” and “hereunder” refer to this Agreement as a whole and not to
the particular Clause or Schedule in which the words may be used.
	 
	3.	 	THE FACILITY — THE BORROWERS JOINT AND SEVERAL LIABILITY
	 
	3.1	 	The Lender hereby agrees to make available to the Borrowers subject to the terms and the
conditions hereof the Facility for the purposes stated in Clause 1(A) in an aggregate amount
not exceeding at any relevant time Sixty Five million Two hundred Eighty thousand Dollars
($65,280,000) provided however that unless the Lender otherwise agrees in its sole
discretion (i) each Advance shall be made available for drawing until the Termination Date in
respect thereof and otherwise upon the terms and subject to the conditions of this Agreement,
(ii) the Refinancing Advance A and the Refinancing Advance B shall be drawn down concurrently
and (iii) to the extent that the Borrowers prepay any sums initially borrowed in respect of
the Facility they shall be entitled to reborrow the amount so prepaid up to the Applicable
Limit prevailing at the relevant time.
	 
	3.2	 	The Borrowers undertake to use the proceeds of each Advance in accordance with and for the
purposes referred to in Clause 1(A); the Lender (although entitled) shall not be obliged to
monitor the application of such proceeds.
	 
	3.3	 	All the liabilities and obligations of the Borrowers under this Agreement shall, whether
expressed to be so or not, be joint and several so that each Borrower shall be jointly and
severally responsible with the other Borrowers for all liabilities and obligations of the
Borrowers under this Agreement and so that such liabilities and obligations shall not be
impaired by:

	 	(a)	 	any failure of this Agreement to be legal, valid, binding and enforceable in
relation to any of the Borrowers whether as a result of lack of corporate capacity,
due authorisation, effective execution or otherwise;
	 
	 	(b)	 	any giving of time, forbearance, indulgence, waiver or discharge in relation
to any of the Borrowers or to any other party to the Finance Documents; or
	 
	 	(c)	 	any other matter or event whatsoever which might have the effect of impairing
all or any of the liabilities and obligations of any of the Borrowers.

	3.4	 	Each of the Borrowers declares that it is and will, throughout the Security Period, remain a
principal debtor for all amounts owing under this Agreement and none of the Borrowers shall in
any circumstances be construed to be a surety for the obligations of the other Borrowers
hereunder.

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	3.5	 	Until all sums owing to the Lender by the Borrowers under this Agreement, the Master
Agreement and the other Finance Documents have been paid in full none of the Borrowers
(hereinafter called a “Creditor Borrower”) will without the prior written consent of the
Lender ask, demand, sue for, take or receive from any of the other Borrowers or any other
member of the Group (hereinafter called a “Debtor Borrower”) by set-off or any other manner
the whole or any part of all present and future sums, liabilities and obligations payable or
owing by the Debtor Borrower to the Creditor Borrower whether actual or contingent jointly or
severally or otherwise howsoever (such sums being hereinafter called the “Subordinated
Liabilities”) so long as any Senior Liabilities are outstanding to the Lender (for which
purpose “Senior Liabilities” shall mean all present and future sums, liabilities and
obligations whatsoever payable or owing by the Borrowers (or any of them) pursuant to the
Finance Documents or any of them or otherwise whatsoever, whether actual or contingent jointly
or severally or otherwise howsoever).
	 
	4.	 	AVAILABILITY — DESIGNATED TRANSACTIONS
	 
	4.1	 	Subject as herein provided, the Facility is available to the Borrowers to be drawn down
during the Availability Period. Any part of the Facility which remains undrawn at the close of
business in Athens on the latest Termination Date shall be automatically cancelled.
	 
	4.2	 	Any Designated Transaction shall be entered into on the basis of the Master Agreement and
shall be concluded with the Lender.
	 
	4.3	 	No Designated Transaction may be entered into by the Borrowers (i) if: a material adverse
change occurs in the financial condition or operation of any one or more of the Security
Parties or any other member of the Group and/or if any other Event of Default occurs or an
event which with the giving of notice or passage of time or the combination of both or the
fulfillment of any other condition, may become an Event of Default having occurred and/or (ii)
if by being entered into it would increase the Swap Exposure to a sum in excess of the Maximum
Permitted Swap Exposure.
	 
	4.4	 	Notwithstanding any provision of this Agreement and/or the Master Agreement to the contrary,
if for any reason a Designated Transaction has been entered into but the Facility or any part
thereof is not drawn under this Agreement then, subject to Clause 4.5, the Lender shall be
entitled but not obliged (and, where relevant, may do so without the consent of the Borrowers
where it would otherwise be required whether under the Master Agreement or otherwise) to
amend, supplement, cancel, net out, terminate, liquidate, transfer or assign all or any part
of the rights, benefits and obligations created by such Designated Transaction and/or the
Master Agreement and/or to obtain or re-establish any hedge or related trading position in any
manner and with any person the Lender in its absolute discretion may determine.
	 
	4.5	 	If a Designated Transaction has been entered into but the Facility or any part thereof is not
drawn down under this Agreement and the Lender in its absolute discretion agrees, following a
written request of the Borrowers, that the Borrowers may be permitted to

24

 

	 	 	maintain all or part of a Designated Transaction, the Borrowers shall, within fifteen (15)
days of being notified by the Lender of such requirement, provide the Lender with, or
procure the provision to the Lender of, such additional security as shall in the opinion of
the Lender be adequate to secure the performance of such Designated Transaction, which
additional security shall take such form and be constituted by such documentation, as the
Lender in its absolute discretion may approve or require.
	 
	4.6	 	The Borrowers shall on the first written demand of the Lender indemnify the Lender in respect
of all losses, costs and expenses (including, but not limited to, legal costs and expenses)
incurred or sustained by the Lender as a consequence of or in relation to the effecting of any
matter or transactions referred to in Clauses 4.4 and 4.5.
	 
	4.7	 	Without prejudice to or limitation of the obligations of the Borrowers under Clause 4.6, in
the event that the Lender exercises any of its rights under Clauses 4.4 or 4.5 and such
exercise results in all or part of a Designated Transaction being terminated such termination
shall be treated under the Master Agreement in the same manner as if it were a Terminated
Transaction (as defined in section 14 of the Master Agreement) effected by the Lender after an
Event of Default (as so defined in that section 14) by the Borrowers and, accordingly, the
Lender shall be permitted to recover from the Borrowers a payment for early termination
calculated in accordance with the provisions of section 6(e)(i) of the Master Agreement.
	 
	4.8	 	In the event that the Lender fails to enter into a Designated Transaction with the Borrowers,
the Lender shall not be liable to the Borrowers to enter into such Designated Transaction nor
to compensate the Borrowers for such failure.
	 
	5.	 	NOTICE OF DRAWDOWN
	 
	5.1	 	Subject to:
	 
	5.1.1	 	the receipt by the Lender of the documents specified in Clause 18.1 in form and substance
satisfactory to the Lender and its legal advisers before the relevant Drawdown Date; and
	 
	5.1.2	 	no Event of Default or an event which with the giving of notice or passage of time or a
determination of the Lender or satisfaction of any other condition or any combination of the
foregoing, may become an Event of Default having occurred; and
	 
	5.1.3	 	the representations and warranties set out in Clause 16 (updated mutatis mutandis on the
relevant Drawdown Date) being true and correct; and
	 
	5.1.4	 	the receipt by the Lender of a Notice of Drawdown in the form set out in Schedule 1 hereto
not later than 11.00 a.m. (London time) two (2) Banking Days prior to the relevant Drawdown
Date setting out the date of the proposed Drawdown,

25

 

	 	 	each Advance shall be made available to the Borrowers in accordance with and on the terms
and conditions of this Agreement.
	 
	5.2	 	Unless otherwise expressly agreed between the Borrowers and the Lender no Working Capital
Advance shall be made:
	 
	5.2.1	 	if both the Refinancing Advances have not been previously drawn down;
	 
	5.2.2	 	if such relevant Working Capital Advance has not been specifically approved by the Lender;
	 
	5.2.3	 	if by being drawn down it would increase the Facility to a sum in excess of the Applicable
Limit prevailing at the relevant time; and
	 
	5.2.4	 	in an amount of less than One million Dollars ($1,000,000) or multiples thereof.
	 
	5.3	 	Without prejudice to the generality of the foregoing provisions of this Clause 5 the Lender
shall not be obliged to make available any Advance if, following its drawing, the covenant
contained in Clause 23 (Security Margin) would cease to be complied with.
	 
	5.4	 	Each Notice of Drawdown shall be irrevocable and the Borrowers shall be bound to borrow in
accordance with such notice.
	 
	5.5	 	On payment of the amount drawn down in respect of each Advance the Borrowers shall sign an
Acknowledgement in the form set out in Schedule 2 hereto.
	 
	5.6	 	If the Borrowers give a Notice of Drawdown pursuant to Clause 5.1.4 and the Lender makes
arrangements on the basis of such notice to acquire Dollars in the London Interbank Market to
fund an Advance or any part thereof and the Borrowers are not permitted or otherwise fail to
borrow in accordance with such Notice of Drawdown (either on account of any condition
precedent not being fulfilled or otherwise) the Borrowers shall indemnify the Lender against
any damages, losses or expenses which the Lender may incur (either directly or indirectly) as
a consequence of the failure by the Borrowers to borrow in accordance with such Notice of
Drawdown.
	 
	5.7	 	The Borrowers may, at any time during the Availability Period, cancel the Facility or, as the
case may be, any part thereof which remains undrawn in whole or in part (but if in part in a
minimum of One hundred thousand Dollars ($100,000) or a multiple thereof upon giving the
Lender three (3) Banking Days’ notice in writing to that effect. Such notice once given shall
be irrevocable and upon such cancellation taking effect the Facility shall be reduced
accordingly. Notwithstanding any such cancellation pursuant to this Clause 5.7 the Borrowers
shall continue to be liable for any and all amounts due to the Lender under this Agreement
including without limitation any amounts due to the Lender under Clauses 7, 9, 15 and 28.

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	6.	 	INTEREST PERIODS
	 
	6.1	 	Subject to Clause 6.2, the Interest Periods applicable to each Advance shall (subject to
market availability) be periods of a duration of three (3) or six (6) months (or such other
periods as the Lender and the Borrowers may agree) as selected by the Borrowers by written
notice to be received by the Lender not later than 11.00 a.m. (London time) on the relevant
Nomination Date;
	 
	6.2	 	Notwithstanding the provisions of Clause 6.1:
	 
	6.2.1	 	the initial Interest Period in respect of each Advance shall commence on the Drawdown Date
thereof and shall end on the expiry date thereof and each subsequent Interest Period for such
Advance shall commence on the expiry of the preceding Interest Period in respect thereof;
	 
	6.2.2	 	if any Interest Period would otherwise end on a day which is not a Banking Day, that
Interest Period shall be extended to the next succeeding day which is a Banking Day unless
such next succeeding Banking Day falls in another calendar month in which event that Interest
Period shall end upon the immediately preceding Banking Day;
	 
	6.2.3	 	where any Reduction Date occurs other than at the end of an Interest Period there shall in
respect of that part of the Facility equivalent to the amount of the Reduction Instalment by
which the Applicable Limit is to be reduced on such Reduction Date, be a separate Interest
Period expiring on such Reduction Date and the Interest Rate relating to such part shall be
fixed separately;
	 
	6.2.4	 	no Interest Period shall extend beyond the final Reduction Date;
	 
	6.2.5	 	if the Borrowers fail to select an Interest Period in accordance with the above, such
Interest Period shall be of three (3) months duration or of such other duration as the Lender
in its sole discretion may select; and
	 
	6.2.6	 	save as provided in Clauses 6.2.3 the Borrowers shall not select more than one (1) Interest
Period in respect of an Advance at any one time.
	 
	7.	 	INTEREST
	 
	7.1	 	Subject to the terms of this Agreement the Borrowers shall pay to the Lender interest in
respect of each Advance (or the relevant part thereof) accruing at the Interest Rate for each
Interest Period relating thereto in arrears on the last day of each Interest Period, provided
that where such Interest Period is of a duration longer than three (3) months, accrued
interest in respect of such Advance (or such part thereof) shall be paid every three (3)
months during such Interest Period and on the last day of such Interest Period.

27

 

	7.2	 	Interest shall be calculated on the basis of the actual number of days elapsed and a three
hundred and sixty (360) day year.
	 
	7.3	 	The Interest Rate (including, without limitation, the relevant Applicable Margin) in respect
of each Advance applicable for each Interest Period in respect thereof shall be calculated and
determined by the Lender on each Interest Determination Date and each such determination of an
Interest Rate hereunder shall be promptly notified by the Lender to the Borrowers at the
beginning of each Interest Period in respect thereof and on any other date during such
Interest Period on which the Lender may recalculate the Applicable Margin in accordance with
the provision of the Agreement.
	 
	7.4	 	The Lender’s certificate as to the Interest Rate applicable shall be final and (except in the
case of manifest error) binding on the Borrowers and the other Security Parties.
	 
	8.	 	DEFAULT INTEREST
	 
	8.1	 	In the event of a failure by the Borrowers to pay any amount on the date on which such amount
is due and payable pursuant to this Agreement and/or the other Finance Documents and
irrespective of any notice by the Lender or any other person to the Borrowers in respect of
such failure, the Borrowers shall pay interest on such amount on demand from the date of such
default up to the date of actual payment (as well after as before judgment) at the per annum
rate which is the aggregate of (a) two point five per cent (2.5%) and (b) the relevant
Applicable Margin and (c) the rate at which the Lender in accordance with its normal practice
is offered deposits in Dollars in the London Interbank Market for such period as the Lender
may select at or about 11.00 a.m. (London time) on the Banking Day immediately following that
on which the Lender becomes aware of the default and, so long as the default continues, such
rate shall be recalculated on the same basis thereafter.
	 
	8.2	 	Any interest which shall have accrued under Clause 8.1 in respect of an unpaid amount shall
be due and payable at the end of the period by reference to which it is calculated or such
other date or dates as the Lender may specify by written notice to the Borrowers.
	 
	8.3	 	For the avoidance of doubt, this Clause 8 does not apply to any amount payable under the
Master Agreement in respect of any continuing Designated Transaction as to which Section 9 (h)
(i) of the Master Agreement shall apply.
	 
	9.	 	SUBSTITUTE BASIS
	 
	9.1	 	If the Lender determines (which determination shall be conclusive) that:
	 
	9.1.1	 	at 11.00 a.m. (London time) on any Interest Determination Date the Lender was not being
offered by banks in the London Interbank Market deposits in Dollars in the required amount and
for the required period; or

28

 

	9.1.2	 	LIBOR would not adequately reflect the cost of the Lender of making, funding or maintaining
the Facility or any part thereof for the duration of the next succeeding Interest Period; or
	 
	9.1.3	 	by reason of circumstances affecting the London Interbank Market such deposits are not
available to the Lender in such market; or
	 
	9.1.4	 	adequate and reasonable means do not or will not exist for the Lender to ascertain the
Interest Rate applicable to the next succeeding Interest Period; or
	 
	9.1.5	 	Dollars will or may not continue to be freely transferable;
	 
	 	 	then, and in any such case the Lender shall give notice of any such event to the Borrowers
and in case any of the above occurs on the Interest Determination Date prior to a Drawdown
Date the Borrowers’ right to borrow an Advance which remains available for borrowing shall
be suspended during the continuation of such circumstances.
	 
	9.2	 	If, however, any of the events described in Clause 9.1 occurs on any other Interest
Determination Date relative to an Advance or any part thereof, then the duration of the
relevant Interest Period(s) shall be up to one (1) month and during such Interest Period the
Interest Rate applicable to such Advance or the relevant part thereof shall be the rate per
annum determined by the Lender rounded upwards to the nearest whole multiple of one sixteenth
per cent (1/16th%) to be the aggregate of the relevant Applicable Margin and the cost
(expressed as a percentage rate per annum) to the Lender of funding the amount of such Advance
or any part thereof during such Interest Period(s).
	 
	9.3	 	During such Interest Period(s) the Borrowers and the Lender shall negotiate in good faith in
order to agree an Interest Rate or Rates and Interest Period or Periods satisfactory to the
Borrowers and the Lender to be substituted for those which but for the occurrence of any such
event as specified in this Clause would have applied. If the Borrowers and the Lender are
unable to agree on such an Interest Rate(s) and Interest Period(s) by the day which is two (2)
Banking Days before the end of the Interest Period referred to above, the Borrowers shall
repay the Facility together with accrued interest thereon at the Interest Rate set out above
together with all other amounts due under this Agreement relative to the Facility but without
any prepayment fee, on the last day of such Interest Period, whereupon both Facility shall be
cancelled and no further Advances shall be made hereunder.
	 
	10.	 	PREPAYMENT
	 
	10.1	 	If, at any time during the Security Period, a Ship is sold or becomes a Total Loss or the
Mortgage on that Ship is discharged, on the Total Loss Reduction Date or on the Disposal
Reduction Date or on the date of discharge of Mortgage on that Ship (as the case may be), the
Borrowers shall prepay such part of the Facility as is equal to the higher of (i) the Relevant
Amount and (ii) such amount in Dollars as shall ensure that, following the relevant
prepayment, the Security Margin referred to in Clause 23 is maintained.

29

 

	 	 	Defined terms
	 
	 	 	For the purposes of this Clause 10.1:

	 	(a)	 	“Applicable Fraction” means, in relation to a Ship, a fraction having a
numerator of an amount equal to the Market Value of such Ship (as most recently
determined in accordance with clause 21.26) and a denominator of an amount equal to
the aggregate Market Values of all of the Mortgaged Ships (as most recently determined
in accordance with clause 21.26), in each case as at the Disposal Reduction Date or
Total Loss Reduction Date or the date of discharge of Mortgage on that Ship (as the
case may be);
	 
	 	(b)	 	“Disposal Reduction Date” means:

	 	(i)	 	in relation to a Ship which has become a Total Loss, its
Total Loss Reduction Date; or
	 
	 	(ii)	 	in relation to a Ship which is sold in accordance with the
provisions of the relevant Security Documents, the date of completion of such
sale by the transfer of title to such Ship to the purchaser in exchange for
payment of the relevant purchase price; or
	 
	 	(iii)	 	in relation to a Ship the Mortgage on which is discharged
following the request of the Borrowers and the consent of the Lender in
accordance with this Clause 10.1, the date of discharge of such Mortgage by
the Lender;

	 	(c)	 	“Relevant Amount” means, in relation to a Ship which has become a Total Loss
or is sold or the Mortgage of which is discharged in accordance with this Clause 10.1,
the amount in Dollars which is equal to the amount of the Applicable Fraction
multiplied by the aggregate amount of the Facility outstanding and the Swap Exposure
as of the Disposal Reduction Date for such Ship; and
	 
	 	(d)	 	“Total Loss Reduction Date” means, in relation to a Ship which has become a
Total Loss, the date which is the earlier of:

	 	(i)	 	the date falling one hundred and eighty (180) days after that
on which such Ship becomes a Total Loss; and
	 
	 	(ii)	 	the date upon which insurance proceeds are or Requisition
Compensation is received in respect of such Total Loss by the relevant Owner
(or the Lender pursuant to the relevant General Assignment or Mortgage).

	 	 	Subject to no Event of Default or any event which with the giving of notice or passage of
time or satisfaction of any other condition or any combination of the foregoing may become
an Event of Default being in occurrence or continuing at the time a prepayment is made
under this Clause 10.1, any balance arising from the sale or Total Loss or discharge of
Mortgage proceeds of a Ship, after the prepayment required by this Clause 10.1 has been

30

 

	 	 	made shall be released to the Borrowers or to such other person as the Borrowers may
direct.

	 	 	PROVIDED HOWEVER THAT if at any time during the Security Period there is only one Ship
subject to a Mortgage and the Mortgage on that Ship is discharged following the Borrowers’
request or that Ship is sold (in both cases with the Lender’s prior written consent) or
becomes a Total Loss, on the Disposal Reduction Date or the Total Loss Reduction Date or on
the date of discharge of the Mortgage on that Ship (as the case may be), the Borrowers
shall mandatorily prepay the full amount of the Indebtedness to the Lender.

	10.2	 	For the purposes of this Clause 10.1, a Total Loss shall be deemed to have occurred:

	 	(a)	 	in the case of an actual total loss of a Mortgaged Ship on the actual date
and at the time such Mortgaged Ship was lost or if such date is not known, the date on
which such Ship was last reported;
	 
	 	(b)	 	in the case of a constructive total loss of a Mortgaged Ship upon the date
and at the time notice of abandonment of such Mortgaged Ship is given to the Insurers
of such Mortgaged Ship for the time being (provided a claim for such total loss is
admitted by the Insurers) or, if the Insurers do not admit such a claim, or, in the
event that such notice of abandonment is not given by the Owner thereof to the
Insurers of such Mortgaged Ship, on the date and at the time on which the incident
which may result, in such Mortgaged Ship being subsequently determined to be a
constructive total loss has occurred;
	 
	 	(c)	 	in the case of a compromised or arranged total loss of a Ship, on the date
upon which a binding agreement as to such compromised or arranged total loss has been
entered into by the Insurers of such Mortgaged Ship;
	 
	 	(d)	 	in the case of Compulsory Acquisition of a Ship, on the date upon which the
relevant Compulsory Acquisition occurs; and
	 
	 	(e)	 	in the case of hijacking, theft, condemnation, capture, seizure, arrest,
detention or confiscation of a Mortgaged Ship (other than where the same amounts to
Compulsory Acquisition of such Mortgaged Ship) by any Government Entity, or by persons
purporting to act on behalf of any Government Entity or by pirates, hijackers,
terrorists or similar persons, which deprives the Owner thereof of the use of such
Mortgaged Ship for more than thirty (30) days, upon the expiry of the period of thirty
(30) days after the date upon which the relevant hijacking, theft, condemnation,
capture, seizure, arrest, detention or confiscation occurred.

	10.3	 	Unless an Event of Default shall have occurred (whereupon all moneys received by the Lender
pursuant to Clause 10.1 shall be applied in accordance with the provisions of Clause 12) any
and all amounts prepaid pursuant to Clause 10.1 shall be applied at the option of the Lender
towards prepayment of the Facility and upon such prepayment being

31

 

	 	 	effected the Reduction Instalments shall be reduced either pro rata or in inverse order of
maturity (at the option of the Lender) by the amount being prepaid or, in any other manner
to be determined by the Lender in its sole discretion; provided however that unless the
Lender otherwise expressly agrees in writing, upon application of any sums so prepaid
towards prepayment of the Facility, the Applicable Limit shall be reduced by the amounts so
prepaid and applied.
	 
	10.4	 	By giving not less than fifteen (15) Banking Days’ prior written notice to the Lender the
Borrowers may prepay all or any part of the Facility (but if in part the amount to be prepaid
shall be One hundred thousand Dollars ($100,000) or a multiple thereof) at the end of the then
current Interest Period. The Borrowers shall obtain any consent or approval from the relevant
authorities that may be necessary to make any such prepayment of the Facility or any part
thereof and if it fails to obtain and/or comply with the terms of such consent or approval and
in consequence thereof the Lender has to repay the amount prepaid or the Lender incurs any
penalty or loss then the Borrowers shall indemnify the Lender forthwith against all amounts so
repaid and/or against all such penalties and losses incurred.
	 
	10.5	 	Unless the Lender otherwise expressly agrees in writing, all prepayments under Clause 10.4
shall be applied towards prepayment of the Facility and upon such prepayment being effected
the Reduction Instalments shall be reduced either pro rata or in inverse order of maturity (at
the option of the Lender) or, in any other manner to be determined by the Lender, in its sole
discretion provided however that if any amounts so prepaid are reborrowed in accordance with
Clause 10.8, the obligation of the Borrowers to pay any Reduction Instalments prepaid in
accordance with this Clause 10.5 shall be reinstated.
	 
	10.6	 	Save as otherwise herein expressly provided, any prepayment of the Facility or any part
thereof made or deemed to be made under this Agreement shall, if made otherwise than at the
end of an Interest Period relative to the amounts prepaid, be made together with accrued
interest thereon and such additional amount (if any) as the Lender may certify as necessary to
compensate the Lender for any costs incurred or to be incurred by it as a result of such
prepayment.
	 
	10.7	 	Any notice of prepayment given by the Borrowers under this Agreement shall be irrevocable and
the Borrowers shall be bound to prepay in accordance with each such notice.
	 
	10.8	 	Subject to the other provisions of this Agreement (including, without limitation, Clauses
9.1, 10.3. 11.1, 11.2, 15.1 and 24) any prepayment made under this Agreement and applied
against the Facility or any part thereof may be reborrowed hereunder.
	 
	10.9	 	The Borrowers may not prepay all or any part of the Facility except in accordance with the
express terms of this Agreement.
	 
	10.10	 	Subject to Clause 10.12, on or prior to any repayment or prepayment of the Facility or any
part thereof under this Clause 10 or Clause 9 or Clause 15 or any other provision of this
Agreement, the Borrowers shall wholly or partially reverse, offset, unwind or otherwise
terminate one or more of the continuing Designated Transactions as applicable so that the

32

 

	 	 	notional principal amount of the continuing Designated Transactions thereafter remaining
does not and will not in the future (taking into account the scheduled amortisation) exceed
the amount of the Facility as reducing from time to time thereafter pursuant to Clause
11.1.
	 
	10.11	 	If a Designated Transaction is terminated in circumstances where the Lender would be obliged
to pay an amount to the Borrowers under the Master Agreement, the Borrowers hereby agree that
such payment shall be applied towards prepayment of the Facility in such manner as the Lender
shall determine in sole discretion and authorise the Lender to apply such amount for such
purpose.
	 
	10.12	 	If less than the full amount of the Facility remains outstanding following a prepayment
under this Agreement and the Lender in its absolute discretion agrees, following a written
request of the Borrowers, that the Borrowers may be permitted to maintain all or part of a
Designated Transaction in an amount not wholly matched with or linked to all or part of the
Facility, the Borrowers shall, within fifteen (15) days of being notified by the Lender of
such requirement, provide the Lender with, or procure the provision to the Lender of, such
additional security as shall in the opinion of the Lender be adequate to secure the
performance of such Designated Transaction, which additional security shall take such form and
be constituted by such documentation, as the Lender in its absolute discretion may approve or
require.
	 
	10.13	 	Notwithstanding any provision of the Master Agreement to the contrary and the Borrowers’
obligations under Clause 10.10, in the case of a prepayment of all or part of the Facility
(including, without limitation, following the occurrence of a Total Loss or upon a sale of the
Ship or the discharge of the Mortgage in accordance with Clause 10.1 or under any other
provision of this Agreement) then, subject to Clause 10.12, the Lender shall be entitled but
not obliged (and, where relevant, may do so without the consent of the Borrowers, where it
would otherwise be required whether under the Master Agreement or otherwise) to amend,
supplement, cancel, net out, terminate, liquidate, transfer or assign all or any part of the
rights, benefits and obligations created by any Designated Transaction and/or the Master
Agreement and/or to obtain or re-establish any hedge or related trading position in any manner
and with any person the Lender in its absolute discretion may determine and both the Lender’s
and the Borrowers’ continuing obligations under any Designated Transaction and/or the Master
Agreement shall, unless agreed otherwise by the Lender, be calculated so far as the Lender
considers it practicable by reference to the amended repayment schedule for the Facility
taking into account the fact that less than the full amount of the Facility remains
outstanding.
	 
	10.14	 	The Borrowers shall on the first written demand of the Lender indemnify the Lender in
respect of all losses, costs and expenses (including, but not limited to, legal costs and
expenses) incurred or sustained by the Lender as a consequence of or in relation to the
effecting of any matter or transactions referred to in Clauses 10.10, 10.12 and 10.13.
	 
	10.15	 	Without prejudice to or limitation of the obligations of the Borrowers under Clause 10.14,
in the event that the Lender exercises any of its rights under Clauses 10.10 or 10.12 or 10.13
and such exercise results in all or part of a Designated Transaction being terminated such
termination shall be treated under the Master Agreement in the same manner as if it were a
Terminated Transaction (as defined in section 14 of the Master Agreement) effected by

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	 	 	the Lender after an Event of Default (as so defined in that section 14) by the Borrowers and,
accordingly, the Lender shall be permitted to recover from the Borrowers a payment for
early termination calculated in accordance with the provisions of section 6(e)(i) of the
Master Agreement.
	 
	11.	 	REDUCTION — REPAYMENT
	 
	11.1	 	The Facility shall be reduced by the Borrowers by the thirty two (32) Reduction Instalments,
each such Reduction Instalment being due and payable on the Reduction Date numerically
corresponding to it and, on which such Reduction Instalment shall be due and payable
hereunder. On the final Reduction Date the Borrowers shall also pay to the Lender any other
outstanding amounts of the Facility.
	 
	11.2	 	The Borrowers accept and agree that on each Reduction Date, the maximum amount of the
Facility shall be reduced to the Applicable Limit available on such Reduction Date and in case
that on any Reduction Date the aggregate outstanding principal amount of all Advances drawn
down and outstanding on such Reduction Date, exceeds the Applicable Limit available on such
Reduction Date the Borrowers covenant to pay to the Lender on such Reduction Date such part of
the Facility as shall be required in order to reduce the Facility to the Applicable Limit
available on such Reduction Date.
	 
	12.	 	APPLICATION
	 
	 	 	All moneys received by the Lender under or pursuant to any of the Agreement and/or the
other Finance Documents and expressed to be applicable in accordance with the provisions of
this Clause 12 shall be held by the Lender, to be applied in the following manner:

	 	(a)	 	first, in or towards payment of all sums other than principal of or interest
on the Facility which may be owing to the Lender under this Agreement and the other
Finance Documents or any of them;
	 
	 	(b)	 	second, in or towards payment of the amounts owing (whether actually or
contingently) to the Lender under the Master Agreement (calculated as at the actual
Early Termination Date applying to each particular Designated Transaction, or if no
such Early Termination Date shall have occurred, calculated as if an Early Termination
Date occurred on the date of application or distribution hereunder);
	 
	 	(c)	 	third, in or towards payment to the Lender of any default interest and/or
overdue principal payments payable to the Lender under the Finance Documents;
	 
	 	(d)	 	fourth, in or towards payment to the Lender of any interest owing in respect
of the Facility or any part thereof;
	 
	 	(e)	 	fifth, in or towards payment to the Lender of principal owing in respect of
the Facility;

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	 	(f)	 	sixth, in or towards payment to the Lender of any amount due to it in
accordance with the provisions of Clauses 10.6 and 28 by reason of any such payment in
respect of the Facility not being effected on the last day of an Interest Period in
respect of the total amount of the Facility;
	 
	 	(g)	 	seventh, at any time on or after the occurrence of an Event of Default or any
event which with the giving of notice or passage of time or a determination of the
Lender and/or satisfaction of any condition or any combination of the foregoing may
become an Event of Default in retention of a sum equal to the total of any and all
other amounts which (in the reasonable opinion of the Lender) although not then due to
the Lender under this Agreement and the other Finance Documents will become so due to
the Lender, such sums thereafter to be applied by the Lender from time to time in
accordance with this Clause 12; and
	 
	 	(h)	 	eighth, the surplus (if any) shall be paid to the Borrowers or to whomsoever
else may be entitled to receive such surplus.

	13.	 	EVIDENCE OF DEBT
	 
	13.1	 	The Lender shall maintain in accordance with its usual practice one or more Loan Accounts in
the name of the Borrowers evidencing the Indebtedness.
	 
	13.2	 	In any legal action or proceedings arising out of or in connection with this Agreement and/or
the other Finance Documents the entries made in the Loan Account(s) maintained pursuant to
Clause 13.1 shall be conclusive evidence (save in the case of manifest error) of the existence
and amounts of the liabilities of the Borrowers therein recorded.
	 
	14.	 	PAYMENTS
	 
	14.1	 	All amounts payable under this Agreement and/or the other Finance Documents by the Borrowers,
including amounts payable under this Clause 14, shall be paid in full to the Lender without
set-off or counterclaim or retention and free and clear of and without any deduction or
withholding for or on account of any Taxes.
	 
	14.2	 	In the event the Borrowers are required by law to make any such deduction or withholding from
any payment hereunder then the Borrowers shall forthwith pay to the Lender such additional
amount as will result in the immediate receipt by the Lender (as the case may be) of the full
amount which would have been received hereunder had no such deduction or withholding been
made, but if the Lender shall be or become entitled to any Tax credit or relief in respect of
any Tax which is deducted from any payment by the Borrowers and if the Lender in its sole
determination actually receives a benefit from such Tax credit or relief in its country of
domicile, incorporation or residence, the Lender shall, subject to any laws or regulations
applicable thereto, pay to the Borrowers after such benefit is effectively received by the
Lender such amounts (which shall be conclusively certified by the Lender) as shall ensure that
the net amount actually retained by the Lender is equal to the amount which would have been
retained if there had been no such deduction; the Borrowers shall immediately forward to the
Lender official receipt of the relevant taxation or other authority

35

 

	 	 	or other evidence acceptable to the Lender of the amount deducted or withheld as aforesaid,
provided that in the event that it shall be illegal for the Borrowers to pay such
additional amount as is referred to in this Clause 14.2 then the Indebtedness shall be
repayable by the Borrowers to the Lender on demand.
	 
	14.3	 	All payments to be made by the Borrowers under this Agreement and/or the other Finance
Documents shall be made in Dollars in immediately available and freely transferable and
convertible funds not later than 11.00 a.m. London time on the date upon which the relevant
payment is due to the Lender at such account as the Lender may from time to time nominate by
written notice to the Borrowers.
	 
	14.4	 	The Borrowers undertake to indemnify the Lender against any loss incurred by the Lender as a
result of any judgment or order being given or made for the payment of any amount due under
this Agreement, the Master Agreement and/or the other Finance Documents and such judgment or
order being expressed in a currency other than the currency in which the payment was due under
this Agreement, the Master Agreement and/or the other Finance Documents and as a result of any
variation having occurred in rates of exchange between the date on which the currency is
converted for the purpose of such judgment or order and the date of actual payment thereof.
This indemnity shall constitute a separate and independent liability of the Borrowers and
shall continue in force and effect notwithstanding any such judgment or order as aforesaid.
	 
	15.	 	CHANGE OF CIRCUMSTANCES
	 
	15.1	 	If:
	 
	15.1.1	 	any law, regulation, treaty or official directive (whether or not having the force of law)
or the interpretation thereof by any authority charged with the administration thereof:

	 	(a)	 	subjects the Lender to any Tax with respect to payments of
principal of or interest on the Facility or any other amount payable
hereunder; or
	 
	 	(b)	 	changes the basis of Taxation of payments to the Lender of
principal of or interest on the Facility or of any other amount payable
hereunder (other than a change in the rate of Tax on the overall net income of
the Lender); or
	 
	 	(c)	 	imposes, modifies or deems applicable any reserve and/or
special deposit requirements against or in respect of assets or liabilities
of, or deposits with or for the account of, or loans or credit extended by any
office of the Lender; or
	 
	 	(d)	 	imposes on the Lender any other condition affecting this
Agreement, the Facility or any part thereof or its funding; or

36

 

	15.1.2	 	the Lender complies with any request, law, regulation (including any which relates to
capital adequacy or liquidity control or which affects the manner in which the Lender
allocates capital resources to its obligations under this Agreement (including without
limitation, those resulting from the implementation or application of or compliance with 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 ll”) or any other law or regulation which implements Basel
II) or directive from any applicable fiscal or monetary authority (whether or not having the
force of law) and as a result of any of the foregoing either directly or indirectly:

	 	(a)	 	the cost to the Lender of making, funding or maintaining the
Facility or any part thereof is increased; or
	 
	 	(b)	 	the amount of principal, interest or other amount payable to
the Lender or the effective return to the Lender hereunder is reduced; or
	 
	 	(c)	 	the Lender makes any payment or foregoes any interest or
other return on or calculated by reference to the gross amount receivable by
it from the Borrowers hereunder,

	 	 	then and in each such case upon demand from time to time the Borrowers shall pay to the
Lender such amount as shall compensate the Lender for such increased cost, reduction,
payment or foregone interest or other return. If the Lender is entitled to make a claim
pursuant to this Clause it shall notify the Borrowers of the event by reason of which it is
so entitled and shall submit to the Borrowers a certificate setting out details of the
event giving rise to such compensation, the amount thereof and the manner in which it has
been calculated and in the absence of manifest error such certificate shall be conclusive.
	 
	 	 	On receipt of such certificate the Borrowers shall have the option to prepay within ninety
(90) days the Facility together with all interest accrued thereon and all costs and other
amounts (including amounts payable referred to above and any amount payable under Clause
10.6) payable to the Lender hereunder. If the Borrowers decide to exercise such option they
shall give written notice to the Lender and prepay the amount due to the Lender within
ninety (90) days of the receipt of the certificate referred to above. The Lender’s duties
and liabilities hereunder shall be cancelled on the giving of such notice.
	 
	15.2	 	Notwithstanding anything to the contrary herein contained, if any change in law, regulation
or treaty or in the interpretation or application thereof by any authority charged with the
administration thereof shall make it unlawful for the Lender to make, fund or maintain the
Facility or any part thereof, the Lender may by written notice thereof to the Borrowers
declare that the Lender’s duty to provide the Borrowers with the Facility shall be terminated
forthwith whereupon the Borrowers will prepay forthwith (or if permitted by law on the next
following Interest Payment Date) the Facility together with all interest accrued thereon and
all other amounts payable to the Lender hereunder including the amounts due under Clause 10.6.
The Lender’s duties and liabilities hereunder shall be cancelled on the giving of such notice.

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	15.3	 	If any of the events referred to in Clause 15.1 or Clause 15.2 shall occur, but without
prejudice to the liability of the Borrowers to prepay the Facility, the Borrowers and the
Lender concerned shall negotiate in good faith with a view to agreeing terms for making the
Facility available from another jurisdiction, or funding the Facility from alternative sources
or otherwise restructuring the Facility on a basis which is not unlawful.
	 
	16.	 	REPRESENTATIONS AND WARRANTIES
	 
	16.1	 	The Borrowers hereby represent and warrant to the Lender that:
	 
	16.1.1	 	each Security Party is a company or corporation duly formed and validly existing under the
laws of the country of its incorporation and has the power and authority to own its assets and
carry on business in each jurisdiction in which it owns assets or carries on business;
	 
	16.1.2	 	each Security Party has power to enter into this Agreement and the other Subject Documents
to which such Security Party is a party and to perform and discharge its duties and
liabilities hereunder and thereunder and (in the case of the Borrowers) to borrow hereunder
and to enter into Designated Transactions and each Security Party has taken all necessary
action (whether corporate or otherwise) required to authorise the execution, delivery and
performance of this Agreement and the other Subject Documents and the borrowings to be made
hereunder;
	 
	16.1.3	 	the execution, delivery and performance of this Agreement and the other Subject Documents
will not contravene or exceed the powers granted to each Security Party or by, or any
provision of, any law or regulation in any jurisdiction to which the Security Parties or any
of them are/is subject, any order or decree of any governmental agency or court of or in any
jurisdiction to which the Security Parties or any of them are/is subject, the certificates of
incorporation, the other constitutional documents of the Security Parties or any of them or
any mortgage, deed, contract or agreement to which the Security Parties or any of them is/are
a party and which is binding upon the Security Parties’ assets, and will not cause any
Encumbrance to arise over or attach to all or any part of any Security Party’s revenues or
assets nor require any Security Party to create any such Encumbrance;
	 
	16.1.4	 	all consents, licences, approvals, registrations, authorisations or declarations (including,
without limitation, all foreign exchange control approvals) in any jurisdiction to which the
Security Parties or any of them is/are subject required to enable the Borrowers to borrow
hereunder and to enter into Designated Transactions and the Borrowers and the other Security
Parties lawfully to enter into and perform and discharge their respective duties and
liabilities under this Agreement and the other Subject Documents to which each of them is a
party and to ensure that the duties and liabilities of each of the Borrowers and the other
Security Parties hereunder and thereunder are legal, valid and enforceable in

38

 

	 	 	accordance with the terms of this Agreement and the other Subject Documents to
which each of them is a party and to make this Agreement and the other Subject
Documents admissible in evidence in such aforesaid jurisdictions have been obtained
or made and are in full force and effect;
	 
	16.1.5	 	this Agreement and each of the other Subject Documents to which each Security Party is a
party constitute the legal, valid, binding and unconditional duties and liabilities of each
Security Party as is a party thereto, enforceable against such Security Party in accordance
with the terms hereof or thereof;
	 
	16.1.6	 	no Security Party has failed to pay when due any material amount or to perform any material
duty under the provisions of any agreement relating to indebtedness in excess in aggregate of
Three hundred thousand Dollars ($300,000) to which such Security Party is a party or by which
it may be bound and no event has occurred and is continuing which constitutes, or which with
the giving of notice or lapse of time or both would constitute, a material breach or default
by such Security Party under any such agreement;
	 
	16.1.7	 	no litigation or administrative proceedings in any court, arbitration tribunal or
governmental authority are pending or threatened against any Security Party or any of its
assets which might materially adversely affect such Security Party’s ability to perform and
discharge its duties and liabilities hereunder and under the other Subject Documents to which
it/he/she is a party thereto;
	 
	16.1.8	 	the Financial Statements provided by the Borrowers to the Lender in accordance with Clause
19.1 are complete and correct and present fairly the position of the members of the Group
therein stated and the results of the operations of the members of the Group ended on such
date, and have been prepared in accordance with the Applicable Accounting Principles
consistently applied and give a true and fair view of the financial condition, assets and
liabilities of the members of the Group therein stated at the date to which such Financial
Statements have been prepared and since that date there has been no adverse change in the
financial conditions of the business, assets or operation of the members of the Group therein
stated or the Group taken as a whole (as the case may be);
	 
	16.1.9	 	the information provided to the Lender in relation to this transaction is true and correct
in all material respects and does not omit any information necessary to make any of the
information so provided not misleading;
	 
	16.1.10	 	the copy of each Subject Document delivered by the Borrowers to the Lender is a true and
complete copy thereof;
	 
	16.1.11	 	none of the parties to the Subject Documents is in default thereunder;
	 
	16.1.12	 	none of the Security Parties is in default under any agreement to which it/he is a party or
by which it may be bound and no litigation, arbitration, tax claim,

39

 

	 	 	administrative proceeding or investigation is current or pending or (to its
knowledge) threatened;
	 
	16.1.13	 	the financial condition of the Borrowers and the other Security Parties has not suffered
any material deterioration since that condition was last disclosed to the Lender;
	 
	16.1.14	 	all the obligations and liabilities of the Borrowers hereunder rank and will rank at least
pari passu in right of payments with all other unsubordinated indebtedness of the Borrowers or
any of them;
	 
	16.1.15	 	save as disclosed to the Lender in writing none of the Borrowers, the Corporate Guarantor
and any other member of the Group has incurred any indebtedness or authorised or accepted any
capital commitments (other than that normally associated with the day to day operation or
trading of the Ships, where appropriate);
	 
	16.1.16	 	no Taxes are imposed by deduction withholding or otherwise or any other payment to be made
by any Security Party under this Agreement and/or any other of the Subject Documents or are
imposed on or by virtue of the execution or delivery of the Agreement and/or any other of the
Subject Documents or any document or instrument to be executed or delivered hereunder or
thereunder and all relevant tax returns have been filed;
	 
	16.1.17	 	the choice of law agreed to govern this Agreement and/or any other Subject Document and the
submission to the jurisdiction of the courts agreed in each of the Subject Documents are or
will be on execution of the respective Subject Documents valid and binding on the Borrowers
and any other Security Party which is a party thereto;
	 
	16.1.18	 	each of the Borrowers is a wholly owned Subsidiary of the Corporate Guarantor;
	 
	16.1.19	 	no Encumbrance exists on any Security Party’s assets except as permitted by this Agreement;
	 
	16.1.20	 	the giving of the Corporate Guarantee is to the commercial benefit of the Corporate
Guarantor in that the Corporate Guarantor belongs to the same group of companies as the
Borrowers and shall have a financial and commercial interest in the Facility being extended to
the Borrowers and by giving its Corporate Guarantee, the Corporate Guarantor furthers its own
business interests within the scope of its constitutional documents;
	 
	16.1.21	 	each of the Subject Documents is in full force and effect and constitutes the valid binding
and enforceable obligations of the Borrower and each other Security Party which is a party
thereto and the other parties to it and there has been no breach of the terms or the
obligations of any party to it thereunder and no person has

40

 

	 	 	disputed or repudiated or disclaimed any liability under it or indicated that it
does not consider itself bound by or does not intend to comply with any of the
terms of any such documents;
	 
	16.1.22	 	the Borrowers and the Corporate Guarantor have filed all tax and other fiscal returns
required to be filed by any tax authority to which they are subject and none of the Borrowers
nor the Corporate Guarantor has an office in England or in the United States of America;
	 
	16.1.23	 	no member of the Group is overdue in the payment of any amount in respect of Tax;
	 
	16.1.24	 	the Corporate Guarantor is a company whose shares are listed in Nasdaq and has fully
complied with its obligations arising in respect of such listing;
	 
	16.1.25	 	each Owner is the legal and beneficial owner of its Ship under the laws of the relevant
Flag State;
	 
	16.1.26	 	each Ship is in the absolute and unencumbered ownership of its Owner save as contemplated
by this Agreement and the other Finance Documents;
	 
	16.1.27	 	each Ship maintains the highest class with her Classification Society free of all
recommendations and qualifications of her Classification Society or other conditions or
notations affecting class;
	 
	16.1.28	 	each Ship is operationally seaworthy;
	 
	16.1.29	 	except for the registration of each Mortgage at the appropriate registry of the relevant
Flag State it is not necessary or advisable to ensure the legality, validity, enforceability
or admissibility in evidence of this Agreement and the other Subject Documents, that any of
them be filed, recorded or enrolled with any governmental authority or agency or that they be
stamped with any stamp, registration or similar transaction tax in the United Kingdom in the
Republic of Greece, in the Republic of Panama in the Republic of Liberia, in Bermuda or in
any other country where any Security Party carries on business;
	 
	16.1.30	 	each Ship complies with all relevant laws, regulations and requirements (statutory or
otherwise), including without limitation, the ISM Code, the ISPS Code, the ISM Code
Documentation, the ISPS Code Documentation as are applicable to (i) ships registered under the
law of the relevant Flag State and (ii) engaged in the same or a similar service as such Ship
is or is to be engaged;
	 
	16.1.31	 	the Mortgage in respect of each Ship (as of the Drawdown Date first to occur) has been duly
recorded against such Ship as a valid first priority ship mortgage in accordance with the laws
of her Flag State;

41

 

	16.1.32	 	each Ship is insured in accordance with the provisions of this Agreement in respect of
Insurances;
	 
	16.1.33	 	each Ship is managed by the Manager under the terms of the Management Agreement, relating
thereto;
	 
	16.1.34	 	each Owner and the Manager comply with the provisions of all Environmental Laws in respect
of each Ship;
	 
	16.1.35	 	each Owner and the Manager have obtained all Environmental Approvals and are in compliance
with all such Environmental Approvals in respect of each Ship as appropriate;
	 
	16.1.36	 	none of the Owners nor the Manager have received notice of any Environmental Claim that
alleges that any of the Owners and/or the Manager is not in compliance with any Environmental
Law or any Environmental Approval in respect of each Ship;
	 
	16.1.37	 	there is no Environmental Claim pending against each Owner, the Manager or each Ship;
	 
	16.1.38	 	no Environmental Incident has occurred which could or might give rise to any Environmental
Claim against each Owner, the Manager and each Ship;
	 
	16.1.39	 	none of the Existing Borrowers B is in default of the terms of the Existing Transaction or
entitled to amend or rescind the Existing Transaction; and
	 
	16.1.40	 	none of the Existing Borrowers B has agreed to any amendment or supplement to the Existing
Transaction nor waived or agreed to modify any term of the Existing Transaction or excuse
performance of by the counterparties thereunder of any of their obligations thereunder.
	 
	16.2	 	The representations and warranties of the Borrowers set out in Clause 16.1 above shall
survive the execution of this Agreement and shall be deemed to be repeated on each Drawdown
Date and on each Interest Payment Date with respect to the facts and circumstances existing at
each such time as if made at such time.
	 
	17.	 	SECURITIES
	 
	17.1	 	The Borrowers hereby agree that the Security Documents shall secure with first priority, the
due payment of the Indebtedness.
	 
	17.2	 	It is declared and agreed in relation to the security created by the Security Documents that:
	 
	17.2.1	 	it shall be held by the Lender as a continuing security for the payment of the Indebtedness;

42

 

	17.2.2	 	the security so created shall not be satisfied or discharged by intermediate payment or
satisfaction of any part of the amount secured thereunder;
	 
	17.2.3	 	the security so created shall be in addition to and shall not in any way be prejudiced or
affected by any collateral or other security now or hereafter held by the Lender for all or
any part of the amounts thereby secured; and
	 
	17.2.4	 	every power and right given to the Lender hereunder shall be in addition to and not in
limitation of any and every other power or right of the Lender under the Security Documents
and may be exercised from time to time in such order and as often as the Lender may consider
appropriate.
	 
	18.	 	CONDITIONS PRECEDENT
	 
	18.1	 	Notwithstanding the provisions of Clause 5, the agreement of the Lender to permit the
Drawdown of any Advance hereunder is subject to the condition that the Lender shall have
received not later than the Drawdown Date in respect of such Advance the following documents
or evidence in form and substance satisfactory to the Lender and its legal advisers:
	 
	18.1.1	 	a certificate signed by the secretary or a director of each Security Party, stating, inter
alia, the full names of the persons or persons legally and beneficially entitled as
shareholders/stockholders of the entire issued and outstanding shares/stock of that Security
Party and a copy, certified as a true copy by the secretary/director of each Security Party
of the resolutions of the board of directors and of the shareholders of each Security Party
authorising the transaction contemplated hereby and authorising a person or persons to sign or
execute on behalf of each Security Party this Agreement, each Notice of Drawdown (as in the
form of Schedule 1 thereof), each Acknowledgement (as in the form of Schedule 2 hereof) and
the other Finance Documents as is a party thereto;
	 
	18.1.2	 	the originals of any power or powers of attorney granted pursuant to Clause 18.1.1;
	 
	18.1.3	 	specimen signatures, duly authenticated of the person or persons referred to in Clause
18.1.1;
	 
	18.1.4	 	certificates or other evidence satisfactory to the Lender in its sole discretion of the
existence and good standing of each Security Party, dated not more than fifteen (15) days
before the date of this Agreement;
	 
	18.1.5	 	copies, duly certified as a true copy by the respective secretaries of each Security Party
of the certificate of incorporation and the other constitutional documents of each Security
Party;

43

 

	18.1.6	 	evidence that each Account has been duly opened by the relevant Borrower(s) as appropriate
and all mandate forms, signature cards and authorities have been duly delivered and that each
of such accounts is free of all liens or charges other than the liens and charges in favour of
the Lender referred to herein;
	 
	18.1.7	 	certified copies of all documents (with a certified translation if an original is not in
English) evidencing any other necessary action (including but without limitation governmental
approval, consents, licences, authorisations, validations or exemptions which the Lender or
its legal advisers may require) by or of parties with respect to this Agreement and the other
Finance Documents;
	 
	18.1.8	 	the Corporate Guarantee duly executed by the Corporate Guarantor;
	 
	18.1.9	 	such documentation and other evidence (in form and substance satisfactory to the Lender) as
is reasonably requested by the Lender in order for the Lender to comply with all necessary
“know your customer” or similar identification procedures in relation to the transactions
contemplated in the Subject Documents;
	 
	18.1.10	 	the Accounts’ Charges duly executed by each of the Borrowers, as appropriate;
	 
	18.1.11	 	evidence that the fees payable to the Lender in accordance with Clause 26 have been duly
paid;
	 
	18.1.12	 	the Master Agreement duly executed by the Borrowers;
	 
	18.1.13	 	the Master Agreement Assignment duly executed by the Borrowers;
	 
	18.1.14	 	evidence that an amount of Twenty Five thousand Euros (€25,000) has been paid to the
Lender’s Greek and English law legal advisors in respect of their fees in connection with this
Agreement and the other Finance Documents;
	 
	18.1.15	 	letter from HFW Nominees Limited to the Lender confirming acceptance of their appointment
as agents for service of process in England under Clause 38.4;
	 
	18.1.16	 	a letter from Mr. Peter Kallifidas to the Lender confirming acceptance of his appointment
as agent for service of process in Greece under Clause 38.5.
	 
	18.1.17	 	the opinion letters from Bermuda, Liberia, Panama and such other legal counsels as the
Lender may require, all acceptable to the Lender, in relation to this Agreement and the other
Finance Documents referred to in this Clause 18.1, and in form and substance satisfactory to
the Lender;
	 
	18.1.18	 	evidence that all outstanding indebtedness in relation to each Existing Financial Agreement
shall be repaid in full;

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	18.1.19	 	copy of each Government’s Gazette Issue, wherein the joint ministerial decision regarding
the establishment of an office of each of the Newlead Shipping Borrower and the Newlead
Bulkers Borrower in Greece under Law 89/67 as amended, has been published, together with any
amendment(s) thereof;
	 
	18.1.20	 	certificate issued by the Greek Ministry of Merchant Marine in respect of each of the
Newlead Shipping Borrower and the Newlead Bulkers Borrower, evidencing the establishment of an
office of each of the Newlead Shipping Borrower and the Newlead Bulkers Borrower respectively
in Greece under Law 89/67;
	 
	18.1.21	 	valid certificate dated not later than fifteen (15) days prior to the relevant Drawdown
Date issued by the competent authority confirming that each of the Newlead Shipping Borrower
and the Newlead Bulkers Borrower is current with its obligations with regard to social
security contributions;
	 
	18.1.22	 	the Mortgage over each Ship duly executed by the Owner thereof and notarised or legalised
as appropriate and duly recorded at the appropriate registry of the relevant Flag State;
	 
	18.1.23	 	the General Assignment and the Charter Assignment in respect of each Ship duly executed by
the parties thereto;
	 
	18.1.24	 	the notices of assignment of the Insurances and of the Earnings of the General Assignment
in respect of each Ship duly signed by the relevant Owner thereof;
	 
	18.1.25	 	the notices of assignment of the Earnings and of the Charter in respect of each Ship duly
signed by the Owner thereof and acknowledged by the relevant Charterer;
	 
	18.1.26	 	if required by the Lender, a survey report for each Ship issued by a surveyor appointed by
and/or acceptable to the Lender at the expense of the relevant Owner certifying the condition
of such Ship;
	 
	18.1.27	 	evidence that save for the Encumbrances created by the relevant Finance Documents there is
no Encumbrance whatsoever on each Ship except in favour of the Lender;
	 
	18.1.28	 	evidence that each Ship is insured in accordance with the provisions of this Agreement,
such evidence to be certified by an insurance expert appointed by or acceptable to the Lender
at the expense of the relevant Owner;
	 
	18.1.29	 	evidence that each Ship is classed at the highest classification status with the
Classification Society, free of overdue recommendations or other conditions or notations
affecting her class;

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	18.1.30	 	market valuations on the basis specified in Clause 21.26 issued by reputable sale and
purchase brokers appointed by or acceptable to the Lender, at the expense of the relevant
Owner, certifying the Market Value of each Ship;
	 
	18.1.31	 	certified copies of the classification and international safety and trading certificates of
each Ship issued by the Classification Society free of recommendations or other conditions or
notations affecting her class;
	 
	18.1.32	 	evidence that each Ship is registered in the ownership of the relevant Owner under the laws
of the relevant Flag State, free from registered Encumbrances other than the Mortgage
registered thereon and the other Encumbrances by the relevant Finance Documents;
	 
	18.1.33	 	copies of each Management Agreement and of each Charter for each Ship certified as true and
complete copies thereof by the Borrowers’ legal counsel;
	 
	18.1.34	 	copies of the ISM Code Documentation and the ISPS Code Documentation in relation to each
Ship, the relevant Owner and the Manager;
	 
	18.1.35	 	each Manager’s Undertaking and the notice of assignment of insurances in relation thereto
in respect of each Ship duly executed by the Manager;
	 
	18.1.36	 	the Corporate Guarantor shall have issued and delivered to the Lender, pursuant to a
warrant agreement (the “Warrant Agreement”) 1,500,000 Common Stock Purchase Warrants (the
“Warrants”), which will entitle the Lender to purchase shares of Common Stock, $0.01 par value
of the Corporate Guarantor (the “Common Stock”) (the Common Stock issuable on exercise of the
Warrants being referred to herein as the “Warrant Shares”); each such Warrant, evidenced by a
warrant certificate in the form set out in the relevant Schedule of the Warrant Agreement (the
“Warrant Certificate”) shall be exercisable at the election of the Lender, either in full or
from time to time in part, for a period of eight (8) years commencing from the first Drawdown
Date and the initial exercise price per share at which the Warrant Shares shall be purchasable
upon exercise of the Warrants (the “Exercise Price”) shall be $2.00 per share; notwithstanding
the above, the Warrants may be exercised without the exchange of funds pursuant to the
cashless exercise provisions in Section 6 of the Warrant Agreement;
	 
	18.1.37	 	the Novation Confirmation duly signed by the parties thereto and any and all other
documents required to be executed in order to ensure that the obligations of the Existing
Borrowers B in respect of the Existing Transaction under the Existing Master Agreement shall
become the obligations of all Borrowers under the Master Agreement; and
	 
	18.1.38	 	such further documents and evidence as the Lender may hereafter request.

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	18.2	 	If the Lender, at its discretion, permits an Advance or any part thereof to be borrowed
before certain of the conditions referred to in Clauses 18.1 are satisfied, the Borrowers
shall ensure that those conditions are satisfied within five (5) Banking Days after the
relevant Drawdown Date (or such longer period as the Lender specifies).
	 
	19.	 	FINANCIAL AND GENERAL UNDERTAKINGS
	 
	 	 	The Borrowers hereby jointly and severally undertake with the Lender that throughout the
Security Period the Borrowers shall (and shall procure that each other relevant Security
Party shall) comply with the following provisions of this Clause 19, except as the Lender
may otherwise permit:
	 
	19.1	 	to supply the Lender with such number of copies as the Lender may require of (i) the annual
Financial Statements of the Group audited by the Auditors as soon as available but in any
event not later than one hundred and eighty (180) days after the end of the relevant period to
which they relate starting with the 2009 Financial Statements and (ii) the quarterly
unaudited Financial Statements of the Group as soon as available but in any event not later
than ninety (90) days after the end of the relevant quarterly period starting with the
accounts for the quarterly period ending 31 December 2009 and (iii) such other information
with regard to the business, properties or condition, financial or otherwise, of each member
of the Group as the Lender may from time to time reasonably request;
	 
	19.2	 	to procure that the Financial Statements to be delivered from time to time in accordance with
Clause 19.1 shall be prepared in accordance with the Applicable Accounting Principles and
practices consistently applied, which shall present fairly the financial position of the Group
as at the end of each period, to which they relate and the results of the operations for the
period which they relate;
	 
	19.3	 	to obtain promptly at any time and from time to time such registrations, licenses, consents
and approvals as may be required in respect of this Agreement and the other Subject Documents
under any applicable law or regulation to enable them to perform and discharge their duties
and liabilities hereunder and thereunder and promptly supply the Lender with copies thereof;
	 
	19.4	 	to ensure that at all times the claims of the Lender against each Security Party under this
Agreement and the other Finance Documents rank at least pari passu with the claims of all its
other unsecured creditors save those whose claims are preferred by any bankruptcy, insolvency
or other similar laws of general application;
	 
	19.5	 	to deliver to the Lender translations into English (certified by an authorised translator) of
any documents which have to be delivered to the Lender under the terms of this Agreement or
the other Finance Documents, the originals of which are not in the English language;
	 
	19.6	 	not to make any loans or advances to, or any investments in, any person, firm, corporation or
joint venture (or to any officer, director, stockholder, employee or customer of any such
person);

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	19.7	 	not to borrow any money or permit any such borrowing to continue or incur any indebtedness
whatsoever other than the Facility, the Swap Exposure or other than by way of subordinated
shareholders’ loans or enter into any agreement for payment on deferred terms (otherwise than
on customary suppliers’ credit terms) or any equipment lease or contract hire agreement other
than in the ordinary course of business;
	 
	19.8	 	not to assume, guarantee or otherwise undertake the liability of any person, firm or company
(otherwise than pursuant to the terms hereof and in the ordinary course of operation or
trading of the Ships);
	 
	19.9	 	not to authorise or accept any capital commitments (save and except in connection with the
ordinary course of operation or trading of the Ships);
	 
	19.10	 	not to declare or pay any dividends or repay any shareholders’ loans or make any
distributions to their shareholders in any form whatsoever;
	 
	19.11	 	not to and procure that each of the Manager and the Corporate Guarantor shall not change the
nature of its business or commence any business other than the ownership and operation of
ships;
	 
	19.12	 	not to (save and except as provided in this Agreement or otherwise in favour of the Lender),
create or permit to exist any Encumbrance whatsoever on the Ships or any of them or on any of
the other property or assets, real or personal of any Borrower whether now owned or hereafter
acquired, other than a Permitted Lien without the prior written consent of the Lender;
	 
	19.13	 	without prejudice to the obligations of the Borrowers under Clause 19.14, promptly after the
happening of an Event of Default or an event which with the giving of notice or passage of
time or a determination of the Lender or satisfaction of any other condition or any
combination of the foregoing, may become an Event of Default, to notify the Lender of such
event and of the steps (if any) which are being taken to nullify or mitigate its effect;
	 
	19.14	 	from time to time (but not more than once every six (6) months) on request by the Lender, to
deliver to it a certificate signed by a director or officer of the Borrowers confirming that,
save as may be notified in detail in such certificate, no Event of Default or an event which
with the giving of notice or passage of time or a determination of the Lender or satisfaction
of any other condition or any combination of the foregoing, may become an Event of Default has
occurred and is then subsisting to be accompanied by such evidence as to the information and
matters contained in such certificate as the Lender may from time to time reasonably require;
	 
	19.15	 	to ensure and procure that each Security Party shall maintain its corporate existence under
the laws of the country of its incorporation and shall comply with all relevant legislation
and laws and regulations (including but not limited to the laws and regulations relating to
the listing of the shares of the Corporate Guarantor in Nasdaq) applicable to it;

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	19.16	 	to ensure and procure that no change in the Chief Executive Officer and/or the Chairman of
the Corporate Guarantor shall occur without the prior written consent of the Lender;
	 
	19.17	 	to pay and to ensure and procure that the other Security Parties shall pay all Taxes,
assessments and other governmental charges when the same fall due and ensure and procure that
all relevant tax returns of the Borrowers and the other Security Parties shall be properly and
timely filed;
	 
	19.18	 	not to convey, assign, transfer, sell or otherwise or dispose of the Ships or any of them or
any of the other property, assets or rights owned by the Borrowers whether present or future,
without the prior written consent of the Lender;
	 
	19.19	 	to send (or procure that it is sent) to the Lender as soon as the same is instituted details
of any litigation, arbitration or administrative proceedings against or involving the
Borrowers (or any of them) and/or the other Security Parties (or any of them) and/or the
Charterers (or any of them) or the Ships (or any of them), which is likely to have a material
adverse effect on the Borrowers (or any of them), the other Security Parties (or any of them)
or the operation of the Ships (or any of them);
	 
	19.20	 	to comply (and ensure that each other Security Party will comply) with all laws regulations
treaties and conventions applicable to the Borrowers, the other Security Parties and the Ships
and to carry on the Ships all certificates and other documents which may from time to time be
required to evidence such compliance;
	 
	19.21	 	not to and ensure and procure that the Corporate Guarantor and each other Corporate Security
Party shall not dissolve, merge into or consolidate with any other company or person and
procure that no change in the management or the legal or beneficial ownership of the
Borrowers, the Manager, and the Ships shall be effected;
	 
	19.22	 	to ensure and procure that each Borrower shall be a wholly owned Subsidiary of the Corporate
Guarantor;
	 
	19.23	 	to ensure and procure that Mr. Michail Zolotas and Mr. Nicholas Fistes shall own at all
times whether directly or indirectly an aggregate of at least ten per cent (10%) of the issued
voting share capital of the Corporate Guarantor;
	 
	19.24	 	to execute and procure the execution by each other Security Party of any further document or
documents required by the Lender in order to perfect or complete the security created by the
Finance Documents;
	 
	19.25	 	to use the proceeds of the Facility for the Borrowers’ benefit and under their full
responsibility and exclusively for the purposes specified in this Agreement;
	 
	19.26	 	to ensure and procure that all times throughout the Security Period the Borrowers and/or the
Corporate Guarantor shall maintain with the Lender to the credit of any account held

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	 	 	with the Lender (including the Earnings Accounts but excluding the Retention Account) the
Minimum Liquidity;
	 
	19.27	 	to ensure and procure that the Swap Exposure shall not exceed the Maximum Permitted Swap
Exposure;
	 
	19.28	 	to ensure and procure that:

	 	a)	 	the Equity Ratio shall (i) from the Financial Quarter Day ending on
30th September 2012 until the Financial Quarter Day ending on
30th June 2013 be no less than: twenty five per cent (25%) and (ii) from
the Financial Quarter Day ending on 30th June 2013 and at all times
thereafter throughout the Security Period shall be no less than: thirty per cent
(30%);
	 
	 	b)	 	the ratio of EBITDA to Interest Payable on a trailing four (4) Financial
Quarter basis shall (i) from the Financial Quarter Day ending on 30th
September 2012 until the Financial Quarter Day ending a on 30th June 2013
be no less than: 2:1; and (ii) from the Financial Quarter Day ending on
30th June 2013 and at all times thereafter throughout the Security Period
shall be no less than: 2.5 :1; and
	 
	 	c)	 	the Corporate Guarantor and its Subsidiaries shall maintain on a consolidated
basis on each Financial Quarter Day during the Security Period Working Capital of no
less than zero Dollars ($0).

	 	 	Compliance with the undertakings contained in this Clause 19.28 shall be determined
quarterly by the Lender by reference to the latest Financial Statements of the Group
delivered to the Lender pursuant to Clauses 19.1 and 19.2. Unless and until the
Lender otherwise agrees in writing, at the same time as they deliver those Financial
Statements or at any other time upon the Lender’s request, the Borrowers shall ensure
and procure that the Corporate Guarantor shall deliver to the Lender a certificate in
the form set out in Schedule 3 hereto, signed by the chief financial officer of the
Corporate Guarantor. In the case that the Financial Statements are prepared on the
basis of US GAAP the covenants referred to in this Clause 19.28 may be readjusted by
the Lender and notified to the Borrowers;
	 
	19.29	 	to ensure and procure that notwithstanding anything to the contrary contained in Clause
18.1.38, the Lender may (i) assign the rights to purchase all or any portion of the Warrants
to any affiliate or any other bank or financial institution (ii) transfer the Warrants
(together with its rights hereunder) in compliance with the provisions of the Securities Act
of 1933 of the United States of America, as amended from time to time, and the rules and
regulations promulgated thereunder from time to time (the “Securities Act”);
	 
	19.30	 	to ensure and procure that the Corporate Guarantor, upon the reasonable request of the
Lender, shall file a Registration Statement under the Securities Act, with SEC to register the
Warrant Shares; and

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	19.31	 	to deliver to the Lender such documents and evidence as the Lender shall from time to
time require relating to the verification of identity and knowledge of the Lender’s customers
and the compliance by the Lender with all necessary “know your customer” or similar checks,
always on the basis of applicable laws and regulations or the Lender’s own internal
guidelines, in each case as such laws, regulations or internal guidelines apply from time to
time.
	 
	20.	 	INSURANCE UNDERTAKINGS
	 
	 	 	The Borrowers hereby jointly and severally undertake with the
Lender that throughout the Security Period the Borrowers shall
(at the expense of the Borrowers and upon such terms, in such
amounts and with such Insurers as shall from time to time be
approved in writing by the Lender) comply with the following
provisions of this Clause 20, except as the Lender may otherwise
permit:
	 
	20.1	 	to ensure and procure that each Owner will insure and keep insured the Mortgaged Ships in
Dollars or such other currency as may be approved in writing by the Lender, in the full
aggregate insurable value of the Mortgaged Ships but in no event for an aggregate amount less
than the higher of (a) the aggregate Market Values of the Mortgaged Ships and (b) one hundred
and thirty per cent (130%) of the aggregate of (i) the outstanding amount of the Facility,
(ii) any amount available for drawing under the Facility and (iii) the Maximum Permitted Swap
Exposure against fire, marine and other risks (including Excess Risks) and War Risks covered
by hull and machinery policies;
	 
	20.2	 	to ensure and procure that each Owner will enter each Mortgaged Ship in the name of the Owner
thereof for her full value and tonnage in a protection and indemnity association approved by
the Lender with unlimited liability if available otherwise for the highest possible standard
cover for the time being $1,000,000,000 for oil pollution and for excess oil spillage and
pollution liability insurance for the highest possible standard cover against all Protection
and Indemnity Risks;
	 
	20.3	 	if any Mortgaged Ship enters the territorial waters of the United States of America for any
reason whatsoever, to ensure and procure that the relevant Owner will take out such
additional insurance to cover such risks as may be necessary in order to obtain a Certificate
of Financial Responsibility from the United States Coastguard;
	 
	20.4	 	to ensure and procure that each Owner will, upon the Lender’s request, effect loss of hire
and/or Earnings, Insurance on any or all of the Ships (as may be required by the Lender) in
respect of charterparties which exceed twelve (12) months duration (including, without
limitation, the Charters) and otherwise on such terms and in such amounts as the Lender may
instruct the Owners thereof as being necessary or appropriate;
	 
	20.5	 	to ensure and procure that each Owner will effect such additional Insurances as may
reasonably be requested by the Lender to maintain the scope of the existing cover of the
Insurances;

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	20.6	 	to ensure and procure that each Owner will renew the Insurances at least fourteen (14) days
before the relevant Insurances expire and to procure that the Approved Brokers shall promptly
confirm in writing to the Lender as and when each such renewal is effected;
	 
	20.7	 	to ensure and procure that each Owner will punctually pay all premiums, calls, contributions
or other sums payable in respect of the Insurances and to produce all relevant receipts when
so required in writing by the Lender;
	 
	20.8	 	to ensure and procure that each Owner will pay to the Lender on demand all premiums or other
amounts payable by the Lender in effecting a mortgagee’s interest policy and a mortgagee’s
interest (additional perils) insurance policy in the name of the Lender upon such terms and
conditions and with such insurers and for such amounts as the Lender may require, the
aggregate of which amounts for all the Mortgaged Ships shall not be less than one hundred and
ten per cent (110%) of the aggregate of (a) the outstanding amount of the Facility, (b) any
amount available for drawing under the Facility and (c) the Maximum Permitted Swap Exposure
and under such wording and conditions acceptable to the Lender;
	 
	20.9	 	to ensure and procure that each Owner will arrange for the execution of such guarantees as
may from time to time be required by any Protection and Indemnity or War Risks association;
	 
	20.10	 	to ensure and procure that each Owner will give notice of assignment of the Insurances to
the Insurers in the form set out in Schedule 2 to each of the General Assignments and will
procure that a copy of each notice of assignment shall be endorsed upon or attached to the
relevant Insurance Documents;
	 
	20.11	 	to procure that the Insurance Documents shall be deposited with the Approved Brokers and
that such brokers shall provide the Lender with certified copies thereof and shall issue to
the Lender a letter or letters of undertaking in such form as the Lender shall reasonably
require;
	 
	20.12	 	to procure that the Protection and Indemnity and/or War Risks associations in which each
Mortgaged Ship is entered shall provide the Lender with a letter or letters of undertaking in
their standard form and shall provide the Lender with a copy of the certificates of entry;
	 
	20.13	 	to procure that the Insurance Documents (including all certificates of entry in any
Protection and Indemnity and/or War Risks association) shall contain loss payable clauses in
the form set out in Schedule 3 or Schedule 4 (as may be appropriate) to each General
Assignment;
	 
	20.14	 	to procure that the Insurance Documents shall provide that the lien or set off for unpaid
premiums or calls shall be limited to only the premiums or calls due in relation to the
Insurances on the Mortgaged Ships and for fourteen (14) days prior written notice to be given
to the Lender by the Insurers (such notice to be given even if the Insurers have not received
an appropriate enquiry from the Lender) in the event of cancellation or termination

52

 

	 	 	of Insurances and in the event of the non-payment of the premium or calls, the right to pay
the said premium or calls within a reasonable time;

	20.15	 	to ensure and procure that each Owner will promptly provide the Lender with full information
regarding any casualties or damage to any Mortgaged Ship in an amount in excess of Three
hundred thousand Dollars ($300,000) or in consequence whereof any of the Mortgaged Ships has
become or may become a Total Loss;
	 
	20.16	 	to ensure and procure that each Owner will, at the request of the Lender, provide the
Lender, at the Borrowers’ cost, with a detailed report issued by a firm of marine insurance
brokers or consultants appointed by the Lender in relation to the Insurances;
	 
	20.17	 	to ensure and procure that each Owner will not do any act nor voluntarily suffer nor permit
any act to be done whereby any Insurance shall or may be suspended or avoided and to ensure
and procure that each Owner will not suffer nor permit any of the Mortgaged Ships to engage in
any voyage nor to carry any cargo not permitted under the Insurances in effect without first
covering such Mortgaged Ship to the amount herein provided for with insurance satisfactory to
the Lender for such voyage or the carriage of such cargo;
	 
	20.18	 	(without limitation to the generality of the foregoing) in particular to ensure and procure
that each Owner will not permit any Mortgaged Ship to enter or trade to any zone which is
declared a war zone by any Government or by such Mortgaged Ship’s War Risks Insurers unless
there shall have been effected by the Borrowers as appropriate and at their expense such
special insurance as the War Risk Insurers may require;
	 
	20.19	 	to procure that all amounts payable under the Insurances are paid in accordance with the
loss payable clause in the form set out in Schedule 3 or Schedule 4 (as may be appropriate) to
each General Assignment and to apply and procure that all amounts as are paid to the relevant
Owner are applied to the repair of the damage and the reparation of the loss in respect of
which the said amounts shall have been received; and
	 
	20.20	 	should any Ship be laid up for any period, to ensure and procure that each Owner will
arrange “lay up” Insurances for such Ship during such period, at their own cost and upon such
terms and conditions, in such amounts and with such Insurers as shall from time to time be
approved in writing by the Lender.
	 
	21.	 	OPERATIONAL UNDERTAKINGS
	 
	 	 	The Borrowers hereby jointly and severally undertake with the Lender that throughout the
Security Period the Borrowers shall (and shall procure that each other relevant Security
Party shall) comply with the following provisions of this Clause 21.1 except as the Lender
may otherwise permit:
	 
	21.1	 	to ensure and procure that each Ship shall be kept registered under the laws and the flag of
the relevant Flag State in the ownership of its Owner and such Owner shall not do or suffer to
be done anything whereby such registration may be forfeited or imperilled;

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	21.2	 	to ensure that all Earnings of each Ship shall be paid into the relevant Earnings Account(s)
opened in the name of the Owner of such Ship that no Owner shall open or maintain any account
other that the Accounts with any bank other than the Lender, without the Lender’s prior
written consent;
	 
	21.3	 	to ensure that when due and payable, all taxes, assessments, levies, governmental charges,
fines and penalties lawfully imposed on and enforceable against the Ships or any of them shall
be paid by the relevant Owner;
	 
	21.4	 	to ensure that none of the Ships (or any share thereof or interest therein) shall be sold
transferred, mortgaged, charged, hypothecated or abandoned (save in the case of maritime
necessity) and neither the Insurances nor the Earnings of the Ships or any of them will be
assigned without the prior written consent of the Lender which it shall have the power to
withhold;
	 
	21.5	 	to ensure that none of the Ships shall be operated in any manner contrary to any law or
regulations in any relevant jurisdiction, including, without limitation the ISM Code and ISPS
Code and none of the Owners nor the Manager shall engage in any unlawful trade or carry any
cargo that will expose the relevant Ship to penalty, forfeiture or capture and in the event of
hostilities in any part of the world (whether a war be declared or not) not employ any Ship or
voluntarily suffer her employment in carrying any contraband goods;
	 
	21.6	 	to ensure that no Owner shall create or permit to be created or continued any lien or
Encumbrance(s) on its Ship and/or the Insurances and/or the Earnings of its Ship (other than
Permitted Liens) and/or shall satisfy all claims and demands which if unpaid might in law or
by statute or otherwise create a lien or Encumbrance(s) and (without prejudice to the
generality of the foregoing) no lien or Encumbrance(s) shall be created or permitted to be
created or continued on its Ship for any reason whatsoever other than Permitted Liens;
	 
	21.7	 	to ensure that on the request of the Lender, each Owner shall provide and procure that the
Lender shall be provided with satisfactory evidence that the wages, allotments, insurance and
pension contributions of the Master and crew of its Ship are being paid in accordance with the
articles of agreement relating to such Ship and the relevant regulations and that all
deductions from the remuneration of the Master and crew in respect of any tax liability
(including social insurance contributions) are being made and accounted for to the relevant
authority and that the Master of its Ship has no claim for disbursements other than those
properly incurred by him in the ordinary trading of such Ship on the voyage then in progress;
	 
	21.8	 	if any writ or proceedings shall be issued against any Ship or if any Ship shall be otherwise
attached, arrested or detained by any proceeding in any court or tribunal or by any government
or other authority, the Owners shall immediately notify and procure that the Lender shall be
notified thereof by telefax confirmed by letter and as soon as practicably possible thereafter
and in any event not later than fourteen (14) days from the date of occurrence of any of the
aforesaid events cause such Ship to be released and all liens or

54

 

	 	 	Encumbrance(s) (except for the Mortgage and any Permitted Liens on such Ship) thereon to be
discharged;

	21.9	 	save for the Charters, to ensure and procure that no Owner shall without the prior written
consent of the Lender (which consent shall not be unreasonably withheld) voyage or time
charter its Ship or place her under contract for employment for any period which when
aggregated with any optional periods of extension contained in the said charter or contract,
would exceed twelve (12) months duration; provided however that in the event of a Ship being
employed (with the Lender’s prior written consent) under any demise or bareboat charter or any
charter which when aggregated with any optional periods contained in such charter would exceed
twelve (12) months duration, the Lender shall be furnished forthwith with (a) details and
documentary evidence satisfactory to the Lender in its sole discretion in respect of the new
employment, (b) upon Lender’s request, a specific assignment in favour of the Lender of the
benefit of such charter together with a notice of any such assignment addressed to the
relevant charterer and endorsed with an acknowledgement of receipt by the relevant charterer
all in form and substance satisfactory to the Lender and (c) upon Lender’s request, a specific
agreement of subordination of the rights of such charterer to the rights of the Lender;
	 
	21.10	 	to ensure and procure that no Owner shall without the prior written consent of the Lender
(which it shall have full power to withhold) demise charter its Ship for any period
whatsoever;
	 
	21.11	 	to ensure and procure that no Owner shall without the prior written consent of the Lender
(which it shall have full power to withhold) deliver its Ship into the possession of any
person or persons for effecting repairs or renewals to such Ship the cost of which will exceed
the amount of Three hundred thousand Dollars ($300,000) unless such person or persons shall
have given a written undertaking to the Lender not to exercise any lien or right of detention
on such Ship in respect of the cost of such repairs or renewals;
	 
	21.12	 	to ensure and procure that at all times and at the Owners’ own expense, each Owner shall
maintain its Ship in a seaworthy condition and in good running order and repair in accordance
with first class ship ownership and ship management practice and keep and procure that its
Ship is kept in such condition as will entitle it to the highest classification status with
the Classification Society free from recommendations and notations and procure that the Lender
is provided with certificates issued by the Classification Society that such classification
status is maintained and with copies of all other classification certificates as the Lender
may request in writing;
	 
	21.13	 	to ensure and procure that each Owner shall submit its Ship regularly to such periodical or
other surveys as may be required for classification purposes and, if so required by the Lender
in writing, supply and procure that the Lender is supplied with copies of all survey reports
issued in respect thereof;
	 
	21.14	 	to ensure and procure that each Owner shall notify and procure that the Lender is notified
immediately by telefax of any recommendation or requirement imposed on its Ship by the

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	 	 	Classification Society, its Insurers or by any other competent authority that is not
complied with in accordance with its terms;

	21.15	 	to ensure and procure that the Owners shall give and procure that the Lender is given with
reasonable prior notice of any proposed dry docking or any underwater survey of a Ship so that
the Lender (if it so desires) can arrange for a representative to be present;
	 
	21.16	 	to ensure and procure that the Owners shall authorise and procure that the Classification
Society and all other regulatory authorities of the Ships are authorised to disclose to the
Lender any information or documents requested by the Lender relating to the classification,
repair, maintenance or seaworthiness of the Ships;
	 
	21.17	 	to ensure and procure that the Borrowers shall comply with all legal requirements whether
imposed by enactment, regulation, common law or otherwise and have on board the Ships as and
when legally required valid certificates showing compliance therewith;
	 
	21.18	 	without prejudice to Clause 21.17, to ensure and procure that the Owners shall take all
necessary and proper precautions to prevent any infringements of the Anti-Drug Abuse Act of
1986 of the United States of America or any similar legislation applicable to the Ships in any
jurisdiction in or to which a Ship shall be employed or trade or which may otherwise be
applicable to a Ship, to ensure and procure that the Owners or any of them or any other
Security Party and, if the Lender shall so require, the Owners shall enter into a “Carrier
Initiative Agreement” with the United States Customs Service and to procure that such
agreement (or any similar agreement hereafter introduced by any agency of the United States of
America) is maintained in full force and effect by the Owners;
	 
	21.19	 	to ensure and procure that the Owners shall comply with and procure that the Manager and all
servants and agents of the Owners and the Manager or any charterer of the Ships (including,
without limitation, the Charterers) shall comply with, the ISM Code, the ISM Code
Documentation, the ISPS Code, the ISPS Code Documentation, all Environmental Laws and all
legislation of any state or government in relation to the Ships, their ownership, operation
and management or to the business of the Owners including, without limitation, requirements
relating to manning, submission of oil spill response plans, designation of qualified
individuals and establishing financial responsibility;
	 
	21.20	 	to ensure and procure that the Owners shall hold or procure that the Manager shall hold all
appropriate ISM Documentation and provide the Lender with copies of the relevant ISM Code
Documentation and ISPS Code Documentation duly issued to the Owners, the Manager and the Ships
pursuant to the ISM Code and the ISPS Code;
	 
	21.21	 	to ensure and procure that the Owners shall keep or procure that it is kept onboard each
Ship a copy of all relevant ISM Code Documentation and ISPS Code Documentation respectively;

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	21.22	 	to ensure and procure that the Owners shall perform and discharge all duties and liabilities
imposed on the Owners or any of them under any charter (including, without limitation, the
Charters), bill of lading or other contract relating to the Ships;
	 
	21.23	 	to ensure and procure that the Owners shall not remove or permit the removal of any part of
any Ship or any equipment belonging thereto, nor make or permit to be made any alteration in
the structure type or speed of any Ship which materially reduced the value of such Ship
(unless such removal or alteration is required by statute or by her Classification Society)
without the prior written consent of the Lender which it shall have full power to withhold;
	 
	21.24	 	to ensure and procure that at all reasonable times and on reasonable notice, the Owners
shall permit and procure that the Lender or its authorised representative is permitted full
and complete access to the Ships for the purpose of inspecting the state and condition of the
Ships and their cargo and papers and at the written request of the Lender deliver and procure
the delivery for inspection copies of any and all contracts and documents relating to the
Ships whether on board or not;
	 
	21.25	 	to ensure and procure that the Owners shall keep and procure that the Lender is kept fully
informed as to the use, the employment and the position of each Ship and promptly provide and
procure that the Lender is provided with information concerning the classification, status and
insurance of each Ship from time to time as and when so required in writing by the Lender;
	 
	21.26	 	to ensure and procure that when so requested by the Lender, the Owners shall appoint and
procure that two (2) independent sale and purchase shipbrokers shall be appointed, nominated
by the Lender to give valuations of each Ship and any other Fleet Ship, as the Lender may
require without physical inspection and on the basis of an arms length purchase by a willing
buyer from a willing seller and, unless the Lender otherwise requires, without taking into
account any Charter or any other charterparty in respect thereof; all costs and fees payable
in connection with such valuations shall be paid by the Borrowers and the value of each Ship
and/or other Fleet Ship (as the case may be) shall be determined by taking into account the
average of the aforesaid valuations;
	 
	21.27	 	to ensure and procure that in the event of Compulsory Acquisition of a Ship by any
Government Entity, the Owners shall execute and procure the execution of any assignment that
the Lender may request in relation to any and all amounts which such Government Entity shall
be liable to pay as Requisition Compensation for such Ship or for her use and if received by
the Owners to pay and procure the payment of such amounts immediately to the Lender;
	 
	21.28	 	to ensure and procure that each Owner shall appoint and procure the appointment of the
Manager as manager of its Ship and shall not vary or terminate this appointment without the
Lender’s prior written consent;
	 
	21.29	 	to ensure and procure that the Owners shall execute and deliver to the Lender such documents
of transfer as the Lender may require in the event of sale of any of the Ships

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	 	 	pursuant to any power of sale contained in the Mortgages or any of them or which the Lender
may have in law;

	21.30	 	to ensure and procure that the Owners shall not employ the Ships or any of them nor allow
their employment in any manner contrary to any law or regulation in any relevant jurisdiction
including, but not limited to, the ISM Code and the ISPS Code;
	 
	21.31	 	to ensure and procure that the Owners shall immediately notify the Lender by fax, confirmed
forthwith by letter, of:

	 	(i)	 	any casualty in respect of a Ship which is or is likely to be or to become a
Major Casualty;
	 
	 	(ii)	 	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;
	 
	 	(iii)	 	any requirement or recommendation made by any insurer or classification
society or by any competent authority in respect of a Ship which is not complied with
in accordance with its terms;
	 
	 	(iv)	 	any arrest or detention of a Ship, any exercise or purported exercise of any
lien on a Ship or her Earnings or her Insurances or any requisition of a Ship for
hire;
	 
	 	(v)	 	any intended dry docking of a Ship;
	 
	 	(vi)	 	any Environmental Claim made against the Owners or any of them or the Manager
or in connection with a Ship or any Environmental Incident in respect thereof;
	 
	 	(vii)	 	any claim for breach of the ISM Code or the ISPS Code, being made against
the Owners or any of them and/or the Manager or otherwise in connection with a Ship;
or
	 
	 	(viii)	 	any other matter, event or incident, actual or threatened the effect of which will
or could lead to the ISM Code and/or the ISPS Code not being complied with;

	 	 	and advise and procure that the Lender shall be advised in writing on a regular basis and
in such detail as the Lender shall require of the Owners’ or any other person’s response to
any of those events or matters;
	 
	21.32	 	each Owner shall keep prominently in the Chart Room and in the Master’s cabin of its Ship a
framed duly completed notice printed in plain type of such size that the area of print shall
cover a space not less than six inches wide and nine inches high reading as follows:

“NOTICE OF MORTGAGE

	 	 	This Ship is owned by [name of Owner] (the “Owner”) and is subject to a first preferred
mortgage in favour of MARFIN EGNATIA BANK Societe Anonyme. Under the terms of the said
mortgage a certified copy of which is preserved with the Ship’s papers neither the

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	 	 	Owner nor the Captain nor any officer or agent nor any charterer of this Ship nor any other
person whatsoever has any power, right or authority whatever to create, incur or permit the
imposition on this Ship any commitments or encumbrances except for crews wages accrued for
not more than three (3) months or salvage.”; and

	21.33	 	to comply and ensure and procure that each other Security Party shall comply with its
respective obligations under each Subject Document to which it is a party and not to and
ensure and procure that each other Security Party will not vary, amend or terminate any of the
aforesaid documents to which it is a party.
	 
	22.	 	RETENTION ACCOUNT AND EARNINGS ACCOUNTS
	 
	22.1	 	The Borrowers hereby agree to open a Retention Account with the Lender. On the date falling
one (1) calendar month after the Drawdown Date first to occur and on the same date in each
consecutive following calendar month (provided that if such day is not a Banking Day, the next
following Banking Day) the Lender will transfer from the Earnings Accounts (at the Lender’s
sole discretion) to the Retention Account an amount equal to one third (1/3rd) of
the Reduction Instalment payable on the next Reduction Date and the relevant monthly fraction
of the interest due on the next Interest Payment Date.
	 
	22.2	 	The Lender shall pay interest to the Borrowers on the credit balances from time to time in
the Retention Account at the rate which it usually pays on equivalent amounts and in
accordance with its usual practice.
	 
	22.3	 	On each Reduction Date, the Lender shall transfer from the Retention Account to the Loan
Account(s) an amount equal to the Reduction Instalment payable on that date and on each
Interest Payment Date the Lender shall transfer from the Retention Account to the Loan
Accounts(s) an amount equal to the interest payable under Clause 7 on that date.
	 
	22.4	 	In the event that there are insufficient funds in the Earnings Accounts to pay the amounts
referred to in Clause 22.1 above the Borrowers agree to pay to the Lender an amount equal to
the difference between the actual amount in the Earnings Accounts and the amount due under
Clause 22.1 on the first next Banking Day (or such other Banking Day agreed pursuant to Clause
22.1) in such month.
	 
	22.5	 	The Lender acknowledges that the Borrowers shall, unless and until an Event of Default (or
any event which only with the giving of notice or passage of time or a determination by the
Lender and/or satisfaction of any condition or any combination of the foregoing may become an
Event of Default) shall occur and the Lender shall direct to the contrary, be entitled from
time to time, to require that moneys for the time being standing to the credit of the Accounts
or any of them be transferred in such amounts and for such periods as the Borrowers select to
fixed-term deposit accounts (“deposit accounts”) opened in the name of the Borrowers with the
Lender. None of the Borrowers shall be entitled to withdraw moneys standing to the credit of
(i) the Retention Account and (ii) the Earnings Accounts or any of them which are the
relevant subject of a fixed term deposit until the expiry of the period of such deposit unless
the Borrowers shall, on withdrawing such moneys pay to the

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	 	 	Lender on demand any loss or expense which the Lender shall certify that it has sustained
or incurred as a result of such withdrawal being made prior to the expiry of the period of
the relevant deposit and the Lender shall be entitled to debit the relevant Earnings
Account for the amount so certified prior to such withdrawal being made. Without prejudice
to the foregoing in the event that any moneys so deposited are to be applied pursuant to
Clause 12, the Borrowers shall, on such application being made, pay to the Lender on demand
any loss or expense which the Lender shall certify that it has sustained or incurred as a
result of such application being made prior to the expiry of the period of the relevant
deposit and the Lender shall be entitled to debit the relevant Account for the amount so
certified prior to such application being made. Any deposit accounts shall, for all the
purposes of the Finance Documents, be deemed to be sub-accounts of the relevant Accounts
from which the moneys deposited in the deposit accounts were transferred and all references
in the Finance Documents to the Accounts or any of them shall be deemed to include the
deposit accounts deemed as aforesaid to be sub-accounts thereof.

	22.6	 	Each Borrower hereby undertakes to ensure that, throughout the Security Period all payments
by the Lender to the Borrowers under each Designated Transaction are paid to the Retention
Account.
	 
	22.7	 	Each Borrower (without prejudice to the terms of each General Assignment) hereby undertakes
to pay and procure that all the Earnings of each Ship are paid to the relevant Earnings
Account. Unless and until the Lender gives notice to the Borrowers that it requires that all
Earnings be paid directly to the Lender (which notice may only be given by the Lender if an
Event of Default has occurred), all amounts in the Earnings Accounts shall be applied as
follows:

	 	(i)	 	first, towards the payment of fees and costs that are due and payable by the
Borrowers to the Lender under the Finance Documents;
	 
	 	(ii)	 	second, towards payment to the Retention Account of the amounts required to
be transferred to the credit thereof in accordance with Clause 22; and
	 
	 	(iii)	 	third, any balance thereafter remaining in the Earnings Accounts shall be
available to the Borrowers.

	23.	 	SECURITY COVER
	 
	 	 	In the event that the Security Cover is below (i) One hundred ten per cent (110%) for the
period falling up to twenty four (24) months after the Drawdown Date first to occur or (ii)
One hundred and thirty per cent (130%) at any time thereafter, the Borrowers shall within
twenty one (21) Banking Days of receipt of a notice from the Lender advising the Borrowers
of the amount of such deficiency (which notice shall be conclusive) either provide to the
Lender additional security (valued in accordance with normal banking practice) which shall
in all respects be satisfactory to the Lender and has a net realizable value at least equal
to the shortfall, or prepay part of the Facility in accordance with Clause 10.4 by an
amount equal to the amount of the shortfall.

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	24.	 	EVENTS OF DEFAULT
	 
	24.1	 	If:

	24.1.1	 	the Borrowers or any of them or any other Security Party fail to pay on the due date for
payment any amount which shall have become due hereunder or under the other Finance Documents;
	 
	24.1.2	 	any representation, warranty or statement made by the Borrowers or any of them or any other
Security Party in this Agreement or in any of the other Finance Documents or any certificate,
statement or opinion delivered or made hereunder or under the Subject Documents or in
connection herewith or with the Subject Documents shall be incorrect or inaccurate when made
in any material respect;
	 
	24.1.3	 	an event of default under and as defined in any of the Subject Documents shall occur;
	 
	24.1.4	 	the Borrowers or any of them or any other Security Party fail(s) duly and punctually to
perform or observe any other term of this Agreement and/or the Master Agreement and in any
such case such failure, if capable of remedy, shall continue for fourteen (14) days (and in
the case of a failure to comply with the covenant contained in Clause 23, such failure shall
continue for twelve (12) calendar months or such other period as the Lender may approve in its
sole and absolute discretion) after the Lender shall have given to the Borrowers notice in
writing of such failure;
	 
	24.1.5	 	any other indebtedness of the Borrowers, the other Security Parties or any of them
exceeding in aggregate Three hundred thousand Dollars ($300,000), shall become due and payable
or, with the giving of notice or lapse of time or both, capable of being declared due and
payable prior to its stated maturity by reason of any circumstance entitling the creditor(s)
thereof to declare such indebtedness due and payable and such indebtedness is not paid within
fourteen (14) days thereof;
	 
	24.1.6	 	the Borrowers or any of them or any other Security Party or any other member of the Group
shall enter into voluntary or involuntary bankruptcy, liquidation or dissolution, or shall
become insolvent, or an administrator, administrative receiver, receiver or liquidator shall
be appointed of all or a material part of its undertaking or assets or proceedings are
commenced by or against them/it under any reorganisation, arrangement, readjustment of debts,
dissolution or liquidation law or regulation, or if any event shall occur which, under the
relevant system of law, shall have an equivalent effect;

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	24.1.7	 	a petition is presented in any Pertinent Jurisdiction for the winding up or administration,
or the appointment of a provisional liquidator, of the Borrowers or any other Security Party
unless such petition is being contested in good faith and on substantial grounds and is
dismissed or withdrawn within thirty (30) days of the presentation of the petition;
	 
	24.1.8	 	the Borrowers or any of them or any other Security Party or any other member of the Group
shall cease or threaten to cease to carry on the whole or a substantial part of their/its
business;
	 
	24.1.9	 	the Borrowers or any of them or any other Security Party or any other member of the Group
shall transfer or dispose of all or a substantial part of their/its assets whether by one or a
series of transactions, related or not;
	 
	24.1.10	 	the Subject Documents or any of them shall cease, in whole or in part, to be valid, binding
and enforceable;
	 
	24.1.11	 	the Borrowers or any of them shall sell, transfer, dispose of or encumber their/its Ship or
any interest or share therein, or agree so to do (save for Permitted Liens) without the prior
written consent of the Lender;
	 
	24.1.12	 	any of the Ships shall become a Total Loss and the Borrowers shall fail to make the
mandatory prepayment required to be made under Clause 10.1 in respect of such Total Loss
within the time therein set forth;
	 
	24.1.13	 	any governmental or other consent, licence or authority required to make this Agreement
and/or any of the other Finance Documents legal, valid, binding, enforceable and admissible in
evidence or required to enable the Borrowers or any of them or any other Security Party to
perform their/its respective duties and discharge their/its liabilities hereunder or under the
other Finance Documents is withdrawn or ceases to be in full force and effect unless the
Borrowers or such other Security Party procures that such consent, licence or authority is
reinstated or re-issued to the satisfaction of the Lender within fifteen (15) calendar days of
the said withdrawal or cessation;
	 
	24.1.14	 	any distress or execution is levied or enforced against a material (in the opinion of the
Lender) part of the property and assets of the Borrowers or any of them or any other Security
Party and such distress or execution is not withdrawn or discharged within ten (10) Banking
Days; or
	 
	24.1.15	 	the Borrowers or any of them or any other Security Party or any other member of the Group
shall stop payment of, or shall be unable to, or shall admit inability to pay their/its debts
as they fall due, or shall enter into any composition or other arrangement with their/its
creditors generally or shall declare a general moratorium on the payment of indebtedness;

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	24.1.16	 	the fulfilment of any one or more of the obligations covenants and undertakings contained
in any one or more of this Agreement, the other Finance Documents and any other documents
executed pursuant hereto or thereto or the exercise of any of the rights vested in the Lender
hereunder or thereunder becoming either unlawful under any applicable law or unauthorised by
any authority having jurisdiction or otherwise impossible;
	 
	24.1.17	 	if (a) 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 (b) an Early
Termination Date (as defined in the Master Agreement) has occurred or been or become capable
of being effectively designated under the Master Agreement or (c) a person entitled to do so
gives notice of an Early Termination Date under Section 6(b)(iv) of the Master Agreement or
(d) the Master Agreement is terminated, cancelled, suspended, rescinded or revoked or
otherwise ceases to remain in full force and effect for any reason;
	 
	24.1.18	 	a material adverse change occurs in the financial condition or operation of any one or more
of the Security Parties or any other member of the Group;
	 
	24.1.19	 	if any Security Party and/or any Charterer repudiates or evidences an intention to
repudiate any one or more of the Subject Documents or if any Subject Document is rescinded or
cancelled or terminated or amended or varied, without the Lender’s prior written consent;
	 
	24.1.20	 	if any Ship is arrested or detained and such arrest or detention is not released within
fourteen (14) days, or an order for the sale of any Ship is made by a court of competent
jurisdiction or the Borrowers cease to retain possession and/or control of any Ship for a
period in excess of fourteen (14) days;
	 
	24.1.21	 	if Michael Zolotas ceases to be Chief Executive Officer and/or Nicholas Fistes ceases to
be the Chairman of the Corporate Guarantor and/or if Michael Zolotas and Nicholas Fistes
together shall own directly or indirectly less than 10% of the Corporate Guarantor’s voting
share capital, in each case, without the Lender’s prior written consent; or
	 
	24.1.22	 	without limitation to the foregoing provisions of this Clause 24.1, any breach occurs which
is material (in the opinion of the Lender) of the terms, and conditions of the Bonds or a
Fundamental Change occurs pursuant to the Fundamental Change Put Option (as each of those
terms is defined in the Bonds).

	 	 	then, and in any such event and at any time thereafter, the Lender may by written notice to
the Borrowers declare that the Facility of the Lender shall be cancelled, whereupon the
same shall be cancelled and declare the Indebtedness immediately due and payable whereupon
the same shall become so payable to the Lender.

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	24.2	 	All amounts received by the Lender under or pursuant to any of the Finance Documents after
the happening of any Event of Default shall be applied by the Lender in payment of the
Indebtedness in accordance with the terms of Clause 12.
	 
	24.3	 	On the occurrence of an Event of Default the Lender shall have the right and power to order
the Ships or any of them to proceed forthwith at the relevant Owner’s risk and expense to a
port or place nominated by the Lender. The relevant Owner undertakes to give the necessary
instructions to the Master of its Ship to comply with any such order of the Lender and if the
relevant Owner fails to give such instructions for any reason whatsoever the Lender shall have
the right and power to give such instructions direct to the Master(s).
	 
	24.4	 	On the occurrence of any Event of Default the Lender shall be entitled but not obliged
to, exercise all its rights under the Master Agreement and to, inter alia, cancel, net out,
unwind, terminate or liquidate all or any part of the rights, benefits and obligations created
by any Designated Transaction and/or the Master Agreement. Without prejudice to or limitation
of the obligations of the Borrowers hereunder and under the Master Agreement, in the event
that the Lender exercises any of its rights under the Master Agreement and such exercise
results in all or part of a Designated Transaction being terminated, such termination shall
constitute a Terminated Transaction (as defined in section 14 of the Master Agreement)
effected by the Lender after an Event of Default (as so defined in that section 14) by the
Borrowers and, accordingly, the Lender shall be entitled to recover from the Borrowers a
payment for early termination calculated in accordance with the provisions of section 6(e)(i)
of the Master Agreement.
	 
	25.	 	SET-OFF
	 
	25.1	 	The Lender shall have the right, in addition to all rights of set off, combination, lien or
otherwise which it has at law or under any agreement between the Lender and the Borrowers or
any of them at any time without demand after the occurrence of an Event of Default:

	25.1.1	 	to set off any amount to the credit of any existing accounts of the Borrowers or any of them
and/or the Corporate Guarantor with the Lender (whether deposit, loan or any other account)
including, without limitation, the Earnings Accounts and the Retention Account in or towards
satisfaction of all amounts due from the Borrowers under this Agreement and/or the other
Finance Documents; and
	 
	25.1.2	 	to transfer and apply any amount standing to the credit of any such existing accounts of the
Borrowers or any of them and/or the Corporate Guarantor with any associate or subsidiary of
the Lender in or towards satisfaction of all amounts due from the Borrowers or any of them
under this Agreement and/or the other Finance Documents.

	25.2	 	Where such set-off or transfer requires the conversion of one currency into another, such
conversion shall be calculated at the spot rate as conclusively determined by the Lender for

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	 	 	purchasing such currency with the currency in which the relevant amounts are denominated on
the date of actual payment.

	26.	 	FEES
	 
	26.1	 	The Borrowers have agreed to pay to the Lender an arrangement fee of Four hundred thousand
Dollars ($400,000) on the Drawdown Date of the Advance first to occur.
	 
	26.2	 	The Borrowers shall also pay to the Lender a commitment fee (the “Commitment Fee”) of One per
cent (1%) per annum on the from time to time available and undrawn amount of the Facility
such Commitment Fee shall accrue from day to day for a period starting on the date of
acceptance of the Commitment Letter and ending the earlier of (a) the relevant Termination
Date and (b) the date of cancellation of any undrawn part of the Facility shall be calculated
upon the exact number of days which have elapsed on the basis of a year consisting of three
hundred and sixty (360) days and shall be payable quarterly in arrears and on the earliest of
(a) the relevant Termination Date and (b) such date of cancellation as the case may be.
	 
	26.3	 	The Borrowers shall also pay to the Lender a management fee of Ten thousand Dollars ($10,000)
which shall be paid on the date falling twelve (12) months from the Drawdown Date of the
Advance first to occur and at annual intervals thereafter throughout the Security Period.
	 
	27.	 	EXPENSES
	 
	27.1	 	Whether or not the Facility or any part thereof, is actually drawn down the Borrowers shall
reimburse the Lender on demand for all costs, charges and expenses incurred by the Lender in
connection with the preparation, negotiation and conclusion of this Agreement and the other
Finance Documents including fees and expenses of the Lender’s legal advisers.
	 
	27.2	 	The Borrowers shall reimburse the Lender on demand for all charges and expenses (including
legal fees) incurred by the Lender in or in connection with the exercise of the Lender’s
rights and powers under this Agreement and the other Finance Documents (including but not
limited to the fees and charges of auditors, brokers, surveyors and lawyers instructed by the
Lender) and with the actual, attempted or purported enforcement of, or preservation of rights
under this Agreement and the other Finance Documents.
	 
	28.	 	INDEMNITY
	 
	 	 	The Borrowers hereunder jointly and severally undertake and agree to indemnify the Lender,
upon the Lender’s first demand, from and against any losses, costs or expenses (including
legal expenses) which they incur in consequence of any Event of Default including (but
without limitation) all losses (including loss of profit for the current Interest Period),
premiums and penalties incurred or to be incurred in liquidating or redeploying deposits
made by third parties or funds acquired or arranged to advance or maintain the

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	 	 	Facility or any part thereof and any liability items which arise, or are asserted, under or
in connection with any law relating to safety at sea.

	29.	 	ENVIRONMENTAL INDEMNITY
	 
	 	 	The Borrowers jointly and severally undertake to indemnify the Lender against all damages,
losses, liabilities, costs, expenses, penalties, fines or proceedings which may be incurred
or paid by or imposed on the Lender directly or indirectly at any time (whether before or
after the Indebtedness has been repaid in full) pursuant to any Environmental Law or any
other environmental legislation of any state or government which would not have been
incurred or paid by or imposed on the Lender had it not entered into this Agreement and/or
the other Finance Documents.

	30.	 	STAMP DUTIES
	 
	 	 	The Borrowers shall pay any and all stamp, registration and similar
taxes and charges of whatsoever nature which may be payable or
determined to be payable on, or in connection with, the execution,
registration, notarisation, performance or enforcement of this
Agreement or the other Finance Documents. The Borrowers shall
indemnify the Lender against any and all liabilities with respect to
or resulting from delay or omission on the part of the Borrowers or
any of them to pay any such taxes.
	 
	31.	 	DETERMINATIONS
	 
	 	 	Each determination of an Interest Rate or a Default Rate or of any amount in respect of
principal or interest or fees or expenses by the Lender in accordance with this Agreement
and every other determination or certification by the Lender under this Agreement shall be
conclusive and binding on the Borrowers in the absence of manifest error.
	 
	32.	 	NO WAIVER
	 
	 	 	No failure to exercise and no delay on the part of the Lender in exercising any right or
power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise
of any right or power preclude any other or future exercise thereof or the exercise of any
other right or power. The rights, powers and remedies herein provided are cumulative and
not exclusive of any rights, powers or remedies provided by law.
	 
	33.	 	PARTIAL INVALIDITY
	 
	 	 	In the event that any term or condition of this Agreement is rendered or declared illegal,
invalid or inoperative in whole or in part by any statute rule or regulation or any
decision of any court or tribunal of competent jurisdiction then such determination or
declaration shall neither affect the validity of any other term or condition of this
Agreement which (save as aforesaid) will remain in full force and effect nor the legality,
validity or enforceability of such term or condition under the laws of any other
jurisdiction.

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	34.	 	TRANSFER, ASSIGNMENT, PARTICIPATION, CHANGE OF LENDING BRANCH
	 
	34.1	 	This Agreement shall bind and be to the benefit of the Borrowers and the Lender and their
respective successors and permitted assigns.
	 
	34.2	 	None of the Borrowers may assign any of its rights, powers, duties or liabilities hereunder
without the prior written consent of the Lender which it shall have full power to withhold.
	 
	34.3	 	The Lender may, without prior notice or the consent of the Borrowers or any other Security
Party, at any time assign, transfer all or part of the Facility and its rights and/or
obligations and/or powers under this Agreement to any other bank or other financial
institution (the “Transferee Lender”). The Lender shall notify the Borrowers of any such
assignment or transfer as soon as practicable.
	 
	34.4	 	The Lender may at any time and from time to time change its lending office in respect of the
whole or any part of its participation in the Facility. The Lender shall notify the Borrowers
of any such change in the lending office as soon as is practicable.
	 
	34.5	 	If the Lender transfers or assigns, transfers or in any other manner grants participation in
respect of all or any part of its rights, powers duties and liabilities hereunder pursuant to
Clause 34.3 the Borrowers undertake immediately on being requested to do so by the Lender and
at the cost of the Lender to enter into and procure that the other parties to the Finance
Documents shall enter into, such documents as may be necessary or desirable to transfer to the
relevant assignee, transferee or participant all or the relevant part of the Lender’s interest
in the Finance Documents and all relevant references in this Agreement and the Finance
Documents to the Lender shall thereafter be construed as a reference to the Lender and/or such
assignee, transferee or participant (as the case may be) to the extent of their respective
interests.
	 
	34.6	 	The Lender may disclose to a potential assignee, transferee of participant or to any other
person who may propose entering into contractual relations with the Lender in relation to this
Agreement such information about the Borrowers and the other Security Parties as the Lender
shall consider appropriate.
	 
	35.	 	NON-IMMUNITY
	 
	35.1	 	None of the Borrowers and the Corporate Guarantor has any right of immunity from set-off,
suit or execution, attachment or other legal process under the laws of the United Kingdom, or
the Republic of Greece, the Republic of Panama the Republic of Liberia or Bermuda.
	 
	35.2	 	The exercise by each of the Borrowers of its rights and performance and discharge of its
duties and liabilities hereunder will constitute commercial acts done and performed for
private and commercial purposes.
	 
	35.3	 	To the extent that the Borrowers or any of them may in any jurisdiction in which proceedings
may at any time be taken for the enforcement of this Agreement and/or any of

67

 

	 	 	the other Finance Documents claim for themselves or their assets immunity from suit,
judgment, execution, attachment (whether, before judgment or otherwise) or other legal
process, and to the extent that in any such jurisdiction there may be attributed to
themselves or their assets any such immunity (whether or not claimed), the Borrowers hereby
irrevocably agree not to claim and hereby irrevocably waive any such immunity to the full
extent permitted by the laws of such jurisdiction.

	36.	 	NOTICES
	 
	36.1	 	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.
	 
	36.2	 	A notice shall be sent:

	 	 	 	 	 

	(a)

	 	to the Borrowers:
	 	c/o Newlead Bulkers S.A.

1-7, Flessa & 83, Akti Miaouli

185 38 Piraeus

Greece

Fax No.: +30 213 0148408
	 
	 	 	 	 
	(b)

	 	to the Lender at:
	 	24B Kifissias Avenue

151 25 Maroussi

Attiki, Greece

Fax No: +30 210 6896358

	 	 	or to such other address as the relevant party may notify the other in writing.
	 
	36.3	 	Subject to Clauses 36.4 and 36.5:

	 	(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, two (2) hours after its transmission is completed.

	36.4	 	However, if under Clause 36.3 a notice would be deemed to be served:

	 	(a)	 	on a day which is not a Banking Day in the place of receipt; or
	 
	 	(b)	 	on such a Banking Day, but after 5 p.m. local time;

	 	 	the notice shall (subject to Clause 36.5) be deemed to be served, and shall take effect, at
9 a.m. on the next day which is such a Banking Day.

68

 

	36.5	 	Clauses 36.3 and 36.4 do not apply if the recipient of a notice notifies the sender within
one (1) 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.
	 
	36.6	 	A notice under or in connection with a Finance Document shall not be invalid by reason that
the manner of serving it does not comply with the requirements of this Agreement or, where
appropriate, any other Finance Document under which it is served if the failure to serve it in
accordance with the requirements of this Agreement or other Finance Document, as the case may
be, has not caused any party to suffer any significant loss or prejudice.
	 
	36.7	 	Any notice under or in connection with a Finance Document shall be in English.
	 
	36.8	 	In this Clause “notice” includes any demand, consent, authorisation, approval, instruction,
waiver or other communication.
	 
	37	 	SUPPLEMENTAL
	 
	37.1	 	The rights and remedies which the Finance Documents give to the Lender 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.

	37.2	 	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.
	 
	37.3	 	A Finance Document may be executed in any number of counterparts.
	 
	37.4	 	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.
	 
	37.5	 	This Agreement supersedes the terms and conditions contained in any correspondence relating
to the subject matter of this Agreement exchanged between the Lender and the Borrowers or
their representatives prior to the date of this Agreement including, without limitation, the
Commitment Letter.
	 
	38.	 	LAW AND JURISDICTION
	 
	38.1	 	This Agreement and any non-contractual obligations connected with it shall be governed by,
and construed in accordance with, English law.

69

 

	38.2	 	Subject to Clause 38.3, the courts of England shall have exclusive jurisdiction to settle any
disputes, which may arise out of or in connection with this Agreement and any non-contractual
obligations connected with it.
	 
	38.3	 	Clause 38.2 is for the exclusive benefit of the Lender, 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 the Republic of Greece and/or any
country other than England or Greece 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 Greece or without
commencing proceedings in England or Greece.

	 	 	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 and any
non-contractual obligations connected with it.
	 
	38.4	 	The Borrowers irrevocably appoint HFW Nominees Limited, presently at Friary Court, 65
Crutched Friars, London EC3N 2AE, England, to act as its/their agent to receive and accept on
their/its behalf any process or other document relating to any proceedings in the English
courts which are connected with this Agreement and any non-contractual obligations connected
with it.
	 
	38.5	 	The Borrowers irrevocably designate and appoint Mr. Peter Kallifidas, an Attorney-at-law with
offices at 83 Akti Miaouli, 185 38 Piraeus, Greece, as agent for the service of process in
Greece (“antiklitos”) and agree to consider any legal process or any demand or notice made
served by or on behalf of the Lender on the said agent as being made to the Borrowers. The
designation of such an authorized agent (“antiklitos”) shall remain irrevocable until all
Indebtedness shall have been paid in full in accordance with the terms of this Agreement and
the other Finance Documents.
	 
	38.6	 	Nothing in this Clause 38 shall exclude or limit any right which the Lender 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.
	 
	38.7	 	In this Clause 38, “proceedings” means proceedings of any kind, including an application for
a provisional or protective measure or enforcement court order (diatagi pliromis).

70

 

	39.	 	THIS AGREEMENT AND THE OTHER FINANCE DOCUMENTS
	 
	 	 	In case of any conflict between the provisions of this Agreement and any of the other
Finance Documents the provisions of this Agreement shall prevail.

AS WITNESS the hands of the duly authorised representatives of the parties hereto the day and year
first above written.

71

 

EXECUTION PAGE

	 	 	 	 	 	 	 	 

	SIGNED by
	 	Panagiotis-Peter Kallifidas	 	)	 	/s/ Panagiotis-Peter Kallifidas	 
	and by
	 	 	 	)	 	 	 
	for and on behalf of
	 	 	 	)	 	 	 
	MARFIN EGNATIA BANK Societe Anonyme	 	)	 	 	 
	in the presence of:
	 	Anna Zois	 	)	 	/s/ Anna Zois	 
	 
	 	 	 	 	 	 	 
	SIGNED by
	 	Panagiotis-Peter Kallifidas	 	)	 	/s/ Panagiotis-Peter Kallifidas	 
	for and on behalf of
	 	 	 	)	 	 	 
	AUSTRALIA HOLDINGS LTD.	 	)	 	 	 
	in the presence of:
	 	Anna Zois	 	)	 	/s/ Anna Zois	 
	 
	 	 	 	 	 	 	 
	SIGNED by
	 	Panagiotis-Peter Kallifidas	 	)	 	/s/ Panagiotis-Peter Kallifidas	 
	for and on behalf of
	 	 	 	)	 	 	 
	CHINA HOLDINGS LTD.	 	)	 	 	 
	in the presence of:
	 	Anna Zois	 	)	 	/s/ Anna Zois	 
	 
	 	 	 	 	 	 	 
	SIGNED by
	 	Panagiotis-Peter Kallifidas	 	)	 	/s/ Panagiotis-Peter Kallifidas	 
	for and on behalf of
	 	 	 	)	 	 	 
	BRAZIL HOLDINGS LTD.	 	)	 	 	 
	in the presence of:
	 	Anna Zois	 	)	 	/s/ Anna Zois	 
	 
	 	 	 	 	 	 	 
	SIGNED by
	 	Panagiotis-Peter Kallifidas	 	)	 	/s/ Panagiotis-Peter Kallifidas	 
	for and on behalf of
	 	 	 	)	 	 	 
	GRAND RODOSI INC.	 	)	 	 	 
	in the presence of:
	 	Anna Zois	 	)	 	/s/ Anna Zois	 

72

 

	 	 	 	 	 	 	 	 

	SIGNED by
	 	Panagiotis-Peter Kallifidas	 	)	 	/s/Panagiotis-Peter Kallifidas	 
	for and on behalf of
	 	 	 	)	 	 	 
	NEWLEAD BULKERS S.A.	 	)	 	 	 
	in the presence of:
	 	Anna Zois	 	)	 	/s/Anna Zois	 
	 
	 	 	 	 	 	 	 
	SIGNED by
	 	Panagiotis-Peter Kallifidas	 	)	 	/s/Panagiotis-Peter Kallifidas	 
	for and on behalf of
	 	 	 	)	 	 	 
	NEWLEAD SHIPPING S.A.	 	)	 	 	 
	in the presence of:
	 	Anna Zois	 	)	 	/s/Anna Zois	 

73

 

SCHEDULE 1

FORM OF NOTICE OF DRAWDOWN

	TO: 	 	 MARFIN EGNATIA BANK Societe Anonyme

24B Kifissias Avenue

151 25 Maroussi

Attiki, Greece

Date: [•]

Dear Sirs,

Financial Agreement made to Grand Rodosi Inc, China Holdings Ltd., Australia Holdings, Ltd., Brazil
Holdings Ltd., Newlead Bulkers S.A. and Newlead Shipping S.A.

	1.	 	We refer to the financial agreement dated [•] 2010 (the “Financial Agreement”) and made
between ourselves, as joint and several Borrowers and yourselves as Lender, in connection with
a reducing revolving credit facility of up to Sixty Five million Two hundred Eighty thousand
Dollars ($65,280,000).
	 
	 	 	Terms defined in the Financial Agreement have their defined meanings when used in this
Notice of Drawdown.
	 
	2.	 	We request to borrow [an] Advance[s] as follows:

	 	(a)	 	Amount: $ [•];
	 
	 	(b)	 	Drawdown Date: [•];
	 
	 	(c)	 	Duration of the first Interest Period shall be [•] months; and
	 
	 	(d)	 	Payment instructions: account in the name of [•] and numbered [•]
with [•] of [•].

	3.	 	We represent and warrant that:

	 	(a)	 	the representations and warranties in Clause 16 of the Financial Agreement
and in the other Finance Documents 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 has occurred or will result from the borrowing of the
above Advance[s].

	4.	 	This notice cannot be revoked without your prior written consent.

74

 

	5.	 	[We authorise you to deduct from the proceeds of the above Advance[s] the amount of [(a)] the
arrangement fee referred to in Clause 26.1 [and][b] [the Commitment Fee referred to in Clause
26.2 [and][c][the management fee referred to in Clause 26.3][and][d][and [(e)] all legal fees
payable pursuant to Clause [18.1.14.]]

Yours faithfully,

For and on behalf of

AUSTRALIA HOLDINGS LTD.

 

Attorney-in-Fact

For and on behalf of

CHINA HOLDINGS LTD.

 

Attorney-in-Fact

For and on behalf of

BRAZIL HOLDINGS LTD.

 

Attorney-in-Fact

For and on behalf of

GRAND RODOSI INC.

 
Attorney-in-Fact

75

 

For and on behalf of

NEWLEAD BULKERS S.A.

 

Attorney-in-Fact

For and on behalf of

NEWLEAD SHIPPING S.A.

 

Attorney-in-Fact

76

 

SCHEDULE 2

FORM OF ACKNOWLEDGEMENT

Date: [•]

Financial Agreement dated [•] 2010 (the “Financial Agreement”)

We the undersigned Borrowers declare that in connection with the above Financial Agreement we
received [an] Advance[s] in the amount of [•] Dollars ($[•]) value [•].

Capitalised terms used herein shall have the respective meanings specified in the Financial
Agreement.

Yours faithfully,

For and on behalf of

AUSTRALIA HOLDINGS LTD.

 

Attorney-in-Fact

For and on behalf of

CHINA HOLDINGS LTD.

 

Attorney-in-Fact

For and on behalf of

BRAZIL HOLDINGS LTD.

 

Attorney-in-Fact

77

 

For and on behalf of

GRAND RODOSI INC.

 

Attorney-in-Fact

For and on behalf of

NEWLEAD BULKERS S.A.

 

Attorney-in-Fact

For and on behalf of

NEWLEAD SHIPPING S.A.

 
Attorney-in-Fact

78

 

SCHEDULE 3

Form of Compliance Certificate

	To: 	 	 MARFIN EGNATIA BANK Societe Anonyme

24B Kifissias Avenue

151 25 Maroussi

Attiki, Greece

Date: [•]

Dear Sirs,

We refer to a financial agreement dated [•] 2010 (the “Financial Agreement”) made between
(1) Grand Rodosi Inc, China Holdings Ltd., Australia Holdings, Ltd., Brazil Holdings Ltd., Newlead
Bulkers S.A. and Newlead Shipping S.A. (together the “Borrowers”) as joint and several borrowers
and (2) you, as lender.

Words and expressions defined in the Financial Agreement shall have the same meaning when used in
this compliance certificate.

We enclose with this certificate a copy of the [audited annual][unaudited quarterly] Financial
Statements of the Borrowers and the Group for the annual][quarterly][period] ended [•]. The
Financial Statements (i) have been prepared in accordance with all applicable laws and Applicable
Accounting Principles consistently applied, (ii) give a true and fair view of the state of affairs
of the Group at the date of the accounts and of its profit for the period to which the accounts
relate and (iii) fully disclose or provide for all significant liabilities of the Group.

We hereby 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 matter or event]].

We now certify that, as at [•]:

	(a)	 	the Equity Ratio is not less than [25%][30%]
	 
	(b)	 	Working Capital is not less than zero Dollars ($0)
	 
	(c)	 	the ratio of EBITDA to Interest Payable is not less than [2.0] [2.50] to 1.00

[or as the case may be, specify in what respect any of the financial covenants are not complied
with]

	(d)	 	no Event of Default has occurred and is continuing

79

 

This certificate shall be governed by, and construed in accordance with, English law.

 

[•]

Chief Financial Officer

NEWLEAD HOLDINGS LTD.

80exv10w5

Exhibit 10.5

Dated 16 October 2007

as novated, amended and restated on 31 March 2010

and as further novated, amended and restated on 4 June 2010

NEWLEAD VICTORIA LTD.

as Borrower

— and —

WESTLB AG, LONDON BRANCH

as Lender

 

LOAN AGREEMENT

 

relating to a term loan facility of $27,500,000

WATSON, FARLEY & WILLIAMS

Piraeus

 

 

INDEX

	 	 	 	 	 	 	 
	Clause	 	Page
	 
	 	 	 	 	 	 
	1

	 	INTERPRETATION
	 	 	1	 
	 
	 	 	 	 	 	 
	2

	 	FACILITY
	 	 	12	 
	 
	 	 	 	 	 	 
	3

	 	DRAWDOWN
	 	 	12	 
	 
	 	 	 	 	 	 
	4

	 	INTEREST
	 	 	12	 
	 
	 	 	 	 	 	 
	5

	 	INTEREST PERIODS
	 	 	13	 
	 
	 	 	 	 	 	 
	6

	 	DEFAULT INTEREST
	 	 	14	 
	 
	 	 	 	 	 	 
	7

	 	REPAYMENT AND PREPAYMENT
	 	 	15	 
	 
	 	 	 	 	 	 
	8

	 	CONDITIONS PRECEDENT
	 	 	17	 
	 
	 	 	 	 	 	 
	9

	 	REPRESENTATIONS AND WARRANTIES
	 	 	17	 
	 
	 	 	 	 	 	 
	10

	 	GENERAL UNDERTAKINGS
	 	 	19	 
	 
	 	 	 	 	 	 
	11

	 	CORPORATE UNDERTAKINGS
	 	 	22	 
	 
	 	 	 	 	 	 
	12

	 	INSURANCE
	 	 	23	 
	 
	 	 	 	 	 	 
	13

	 	SHIP COVENANTS
	 	 	27	 
	 
	 	 	 	 	 	 
	14

	 	SECURITY COVER
	 	 	31	 
	 
	 	 	 	 	 	 
	15

	 	PAYMENTS AND CALCULATIONS
	 	 	32	 
	 
	 	 	 	 	 	 
	16

	 	APPLICATION OF RECEIPTS
	 	 	33	 
	 
	 	 	 	 	 	 
	17

	 	APPLICATION OF EARNINGS
	 	 	34	 
	 
	 	 	 	 	 	 
	18

	 	EVENTS OF DEFAULT
	 	 	34	 
	 
	 	 	 	 	 	 
	19

	 	FEES AND EXPENSES
	 	 	38	 
	 
	 	 	 	 	 	 
	20

	 	INDEMNITIES
	 	 	38	 
	 
	 	 	 	 	 	 
	21

	 	NO SET-OFF OR TAX DEDUCTION
	 	 	40	 
	 
	 	 	 	 	 	 
	22

	 	ILLEGALITY, ETC
	 	 	40	 
	 
	 	 	 	 	 	 
	23

	 	INCREASED COSTS
	 	 	41	 
	 
	 	 	 	 	 	 
	24

	 	SET-OFF
	 	 	42	 
	 
	 	 	 	 	 	 
	25

	 	TRANSFERS AND CHANGES IN LENDING OFFICES
	 	 	43	 

 

 

	 	 	 	 	 	 	 
	Clause	 	Page
	 
	 	 	 	 	 	 
	26

	 	VARIATIONS AND WAIVERS
	 	 	43	 
	 
	 	 	 	 	 	 
	27

	 	NOTICES
	 	 	44	 
	 
	 	 	 	 	 	 
	28

	 	SUPPLEMENTAL
	 	 	45	 
	 
	 	 	 	 	 	 
	29

	 	LAW AND JURISDICTION
	 	 	45	 
	 
	 	 	 	 	 	 
	EXECUTION PAGE	 	 	47	 
	 
	 	 	 	 	 	 
	SCHEDULE 1 CONDITION PRECEDENT DOCUMENTS	 	 	48	 
	 
	 	 	 	 	 	 
	SCHEDULE 2 MANDATORY COST FORMULA	 	 	50	 

 

 

THIS AGREEMENT originally made on 16 October 2007 as novated, amended and restated by the First
Deed of Novation, Amendment and Restatement and as further novated, amended and restated by the
Second Deed of Novation, Amendment and Restatement (each as defined below).

BETWEEN:

	(1)	 	NEWLEAD VICTORIA LTD., a corporation incorporated and existing in Liberia whose registered
office is at 80 Broad Street, Monrovia, Liberia (the “Borrower”); and
	 
	(2)	 	WESTLB AG, LONDON BRANCH a company incorporated in Germany, having its registered office at
Herzogstrasse 15 in 40217 Duesseldorf, Germany and acting through its branch at Woolgate
Exchange, 25 Basinghall Street, London EC2V 5HA, England (the “Lender”).

BACKGROUND

The Lender has made available to the Seller (whose rights, obligations and liabilities hereunder
have been novated to the Borrower pursuant to the Second Deed of Novation, Amendment and
Restatement) a term loan facility of (originally) $27,500,000 for the purpose of (originally) (a)
refinancing the Seller’s Existing Indebtedness secured on the Ship and (b) any other purpose as the
Lender may, in its absolute discretion, agree with the Borrower in writing.

IT IS AGREED as follows:

	1	 	INTERPRETATION
	 
	1.1	 	Definitions. Subject to Clause 1.5 in this Agreement:
	 
	 	 	“Account Pledges” means, together, the Earnings Account Pledge and the Holding Account
Pledge and, in the singular, means either of them;
	 
	 	 	“Approved Broker” means each of Arrow Sale & Purchase (UK) Ltd., H. Clarkson & Company
Limited, Fearnley AS, Platou Shipbrokers A.S., Simpson, Spence & Young Shipbrokers Limited
or any other independent sale and purchase shipbroker as may be approved by the Lender from
time to time and in the plural means all of them;
	 
	 	 	“Approved Charter” means:

	 	(a)	 	the time charterparty in relation to the Ship dated 21 October 2009 and entered
into between the Seller (as novated in favour of the Borrower pursuant to novation
agreement dated 28 May 2010) as owner and AWB Geneva S.A. as charterer for a period of
about 12 months commencing as from 22 November 2009 at a daily net charter hire rate of
$18,000; and
	 
	 	(b)	 	any other time charterparty in relation to the Ship for a term of at least 12
months in form and on terms and conditions and entered into with a charterer in all
respects acceptable to the Lender;

	 	 	“Approved Manager” means Newlead Bulkers S.A., a corporation incorporated in Liberia whose
registered office is at 80 Broad Street, Monrovia, Liberia or any other company which the
Lender may approve from time to time as the manager of the Ship;
	 
	 	 	“Approved Manager’s Undertaking” means a letter of undertaking executed by the Approved
Manager in favour of the Lender in the terms required by the Lender agreeing certain matters
in relation to the Approved Manager serving as the manager of the Ship and subordinating the
rights of the Approved Manager against the Ship and the Borrower to the rights of the Lender
under the Finance Documents in such form as the Lender may approve or require;

 

 

	 	 	“Availability Period” means the period commencing on the date of this Agreement and ending
on 30 April 2010 (or, such later date as the Lender may agree with the Borrower) or if
earlier, the date on which the Loan is fully drawn or the Lender’s obligation to make the
Loan is cancelled or terminated;
	 
	 	 	“Balloon Instalment” has the meaning given to it in Clause 7.1(b);
	 
	 	 	“Bond” means the $145,000,000 principal amount of 7 per cent. senior unsecured convertible
notes due 2015 issued by Aries Maritime Transport Ltd. (renamed as Newlead Holdings Ltd.);
	 
	 	 	“Business Day” means a day on which banks are open in London, Athens, Piraeus and
Düsseldorf and, in respect of a day on which a payment is required to be made under a
Finance Document, also in New York City;
	 
	 	 	“Charterparty Assignment” means, in relation to the Ship, an assignment of the rights of
the Borrower under any Approved Charter executed or to be executed by the Borrower in such
form as the Lender may approve or require;
	 
	 	 	“Contractual Currency” has the meaning given in Clause 20.4;
	 
	 	 	“Corporate Guarantee” means the guarantee of the obligations of the Borrower under this
Agreement and the Finance Documents to which it is a party, executed or (as the context may
require) to be executed by the Corporate Guarantor in favour of the Lender in such form as
the Lender may approve or require;
	 
	 	 	“Corporate Guarantor” means Newlead Holdings Ltd., a company incorporated and existing under
the laws of Bermuda whose registered office is at Canon’s Court, 22 Victoria Street,
Hamilton, Bermuda;
	 
	 	 	“Dollars” and “$” means the lawful currency for the time being of the United States of
America;
	 
	 	 	“Drawdown Date” means 31 march 2010 being the date on which the Loan was advanced;
	 
	 	 	“Earnings” mean all moneys whatsoever which are now, or later become, payable
(actually or contingently) to the Borrower and which arise out of the use or operation of
the Ship, including (but not limited to):

	 	(a)	 	all freight, hire and passage moneys, compensation payable to the Borrower in
the event of requisition of the Ship for hire, remuneration for salvage and towage
services, demurrage and detention moneys and damages for breach (or payments for
variation or termination) of any charterparty or other contract for the employment of
the Ship;
	 
	 	(b)	 	all moneys which are at any time payable under Insurances in respect of loss of
earnings; and
	 
	 	(c)	 	if and whenever the Ship is employed on terms whereby any moneys falling within
paragraphs (a) or (b) are pooled or shared with any other person (which may only be
effected with the prior consent of the Lender in accordance with Clause 13.15), that
proportion of the net receipts of the relevant pooling or sharing arrangement which is
attributable to the Ship;

	 	 	“Earnings Account” means an account in the name of the Borrower with the Lender in
Duesseldorf designated “Newlead Victoria Ltd. — Earnings Account”, or any other

2

 

	 	 	account (with that or another office of the Lender) which is designated by the Lender as the
Earnings Account for the purposes of this Agreement;
	 
	 	 	“Earnings Account Pledge” means a pledge in respect of the Earnings Account executed or to
be executed by the Borrower in favour of the Lender in such form as the Lender may approve
or require;
	 
	 	 	“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 the Ship; or
	 
	 	(b)	 	any incident in which Environmentally Sensitive Material is released from a
vessel other than the Ship and which involves a collision between the Ship and such
other vessel or some other incident of navigation or operation, in either case, in
connection with which the Ship is actually or potentially liable to be arrested,
attached, detained or injuncted and/or the Ship and/or the Borrower who owns the Ship
and/or any operator or manager of the Ship is at fault or allegedly at fault or
otherwise liable to any legal or administrative action; or
	 
	 	(c)	 	any other incident in which Environmentally Sensitive Material is released
otherwise than from the Ship and in connection with which the Ship is actually or
potentially liable to be arrested and/or where the Borrower who owns the Ship and/or
any operator or manager of the Ship is at fault or allegedly at fault or otherwise
liable to any legal or administrative action;

	 	 	“Environmental Law” means any law relating to pollution or protection of the environment,
to the carriage of Environmentally Sensitive Material or to actual or threatened releases of
Environmentally Sensitive Material;
	 
	 	 	“Environmentally Sensitive Material” means oil, oil products and any other substance
(including any chemical, gas or other hazardous or noxious substance) which is (or is
capable of being or becoming) polluting, toxic or hazardous;
	 
	 	 	“Event of Default” means any of the events or circumstances described in Clause 18.1;
	 
	 	 	“Existing Indebtedness” means the Financial Indebtedness owed on the Drawdown Date by
(inter alios) the Seller to Scotia Bank Europe Plc. pursuant to a loan agreement dated 14
March 2007 made between the Seller and two other companies as joint and several borrowers
and Scotia Bank Europe Plc.;
	 
	 	 	“Finance Documents” means:

	 	(a)	 	this Agreement;

3

 

	 	(b)	 	the First Deed of Novation, Amendment and Restatement;
	 
	 	(c)	 	the Second Deed of Novation, Amendment and Restatement;
	 
	 	(d)	 	the Account Pledges;
	 
	 	(e)	 	the Corporate Guarantee;
	 
	 	(f)	 	the Mortgage;
	 
	 	(g)	 	the General Assignment;
	 
	 	(h)	 	the Shares Pledge Option Agreement;
	 
	 	(i)	 	the Indemnity and Undertaking;
	 
	 	(j)	 	any Charterparty Assignments; and
	 
	 	(k)	 	any other document (whether creating a Security Interest or not) which is
executed at any time by the Borrower, the Corporate Guarantor 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 Lender under this Agreement or any of the other
documents referred to in this definition;

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

	 	(a)	 	for principal, interest or any other sum payable in respect of any moneys
borrowed or raised by the debtor;
	 
	 	(b)	 	under any loan stock, bond, note or other security issued by the debtor;
	 
	 	(c)	 	under any acceptance credit, guarantee or letter of credit facility made
available to the debtor;
	 
	 	(d)	 	under a financial lease, a deferred purchase consideration arrangement or
any other agreement having the commercial effect of a borrowing or raising of money
by the debtor;
	 
	 	(e)	 	under any foreign exchange transaction, 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;

	 	 	“First Deed of Novation, Amendment and Restatement” means the deed of novation, amendment
and restatement dated 31 March 2010 and made between (inter alios) (i) the Seller as new
borrower and (ii) the Lender as lender setting out the terms and conditions on which this
Agreement was novated, amended and restated;
	 
	 	 	“General Assignment” means a general assignment of the Earnings, the Insurances and any
Requisition Compensation in such form as the Lender may approve or require;
	 
	 	 	“Group” means the Borrower, the Corporate Guarantor, the Approved Manager and all other
shipping companies in the same beneficial ownership as the Borrower and/or

4

 

	 	 	belonging to the same holding company structure (as the case may be) and their subsidiaries
and “member of the Group” shall be construed accordingly;
	 
	 	 	“Holding Account” means an account in the name of the Borrower with the Lender in
Duesseldorf (or any other office of the Lender) which is designated by the Lender in writing
as the Holding Account for the purposes of this Agreement;
	 
	 	 	“Holding Account Pledge” means a pledge in respect of the Holding Account executed or to be
executed by the Borrower in favour of the Lender in such form as the Lender may approve or
require;
	 
	 	 	“Indemnity and Undertaking” means the indemnity and undertaking to be executed by the
Corporate Guarantor in favour of the Lender in such form as the Lender may approve or
require;
	 
	 	 	“Insurances” means:

	 	(a)	 	all policies and contracts of insurance, including entries of the Ship in
any protection and indemnity or war risks association, which are effected in respect
of the Ship, her Earnings or otherwise in relation to her; and
	 
	 	(b)	 	all rights and other assets relating to, or derived from, any of the
foregoing, including any rights to a return of a premium;

	 	 	“Interest Period” means a period determined in accordance with Clause 5;
	 
	 	 	“ISM Code” means:

	 	(a)	 	‘The International Management Code for the Safe Operation of Ship and for
Pollution Prevention’, currently known or referred to as the ‘ISM Code’, adopted by
the Assembly of the International Maritime Organisation by Resolution A.741(18) on 4
November 1993 and incorporated on 19 May 1994 into chapter IX of the International
Convention for the Safety of Life at Sea 1974 (SOLAS 1974); and
	 
	 	(b)	 	all further resolutions, circulars, codes, guidelines, regulations and
recommendations which are now or in the future issued by or on behalf of the
International Maritime Organisation or any other entity with responsibility for
implementing the ISM Code, including without limitation, the ‘Guidelines on
implementation or administering of the International Safety Management (ISM) Code by
Administrations’ produced by the International Maritime Organisations pursuant to
Resolution A.788(19) adopted on 25 November 1995,
	 
	 	 	 	as the same may be amended, supplemented or replaced from time to time;

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

	 	(a)	 	the document of compliance (DOC) and safety management certificate (SMC)
issued pursuant to the ISM Code in relation to the Ship within the periods specified
by the ISM Code; and
	 
	 	(b)	 	all other documents and data which are relevant to the ISM SMS and its
implementation and verification which the Lender may require; and
	 
	 	(c)	 	any other documents which are prepared or which are otherwise relevant to
establish and maintain the Ship’s compliance or the compliance of the Borrower, with
the ISM Code which the Lender may require;

5

 

	 	 	“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) and A.788 (19), as the same may be amended or supplemented 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);
	 
	 	 	“ISM SMS” means the safety management system for the Ship which is required to be developed,
implemented and maintained under the ISM Code;
	 
	 	 	“ISPS Code” means the “International Code for the Security of Ships and of Port Facilities”
as adopted on 12 December 2002 by resolution 2 of the Conference of Contracting Governments
to the International Convention for the Safety of Life at Sea, 1974;
	 
	 	 	“Lender” means WestLB AG, London Branch acting through its branch at Woolgate Exchange, 25
Basinghall Street, London EC2V 5HA, England;
	 
	 	 	“LIBOR” means, for an Interest Period, the rate per annum determined by the Lender to be the
rate at which deposits in Dollars are offered to the Lender by leading banks in the London
Interbank Market at the Lender’s request at or about 11.00 am (London time) on the Quotation
Date for that Interest Period for a period equal to that Interest Period and for delivery on
the first Business Day of it;
	 
	 	 	“Loan” means the principal amount for the time being outstanding under this Agreement;
	 
	 	 	“Major Casualty” means, any casualty to the 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 $1,000,000 or the equivalent in any other currency;
	 
	 	 	“Mandatory Cost” means the percentage rate per annum calculated by the Lender in accordance
with Schedule 2;
	 
	 	 	“Margin” means, subject to the proviso below:

	 	(a)	 	at any time when the Ship is not subject to an Approved Charter and the
Security Cover Ratio is less than 125 per cent., 3.25 per cent. per annum;
	 
	 	(b)	 	at any time when the Ship is subject to an Approved Charter and the Security
Cover Ratio is less than 125 per cent., 3 per cent. per annum;
	 
	 	(c)	 	at any time when the Ship is not subject to an Approved Charter and the
Security Cover Ratio is equal to or greater than 125 per cent, 2.75 per cent. per
annum; and
	 
	 	(d)	 	at any time when the Ship is subject to an Approved Charter and the Security
Cover Ratio is equal to or greater than 125 per cent., 2.50 per cent. per annum,

	 	 	Provided that at any time when the Corporate Guarantor (a) is in breach of the financial
covenants in clause 11.15 of the Corporate Guarantee (as evidenced by the most recent
compliance certificate provided pursuant to clause 11.16 of the Corporate Guarantee) or (b)
fails to provide a compliance certificate pursuant to clause 11.16 of the Corporate
Guarantee, 3.25 per cent. per annum;
	 
	 	 	“Market Value” means the market value of the Ship determined in accordance with Clause 14.4;

6

 

	 	 	“MOA” means the memorandum of agreement dated 4 May 2010, as the same may be amended and
supplemented from time to time, entered into between the Seller and the Borrower in respect
of the sale by the Seller to, and the acquisition by, the Borrower of the Ship;
	 
	 	 	“Mortgage” means the first preferred Liberian ship mortgage on the Ship to be executed by
the Borrower in favour of the Lender in such form as the Lender may approve or require;
	 
	 	 	“Negotiation Period” has the meaning given in Clause 4.6;
	 
	 	 	“Payment Currency” has the meaning given in Clause 20.4;
	 
	 	 	“Pertinent Document” means:

	 	(a)	 	any Finance Document;
	 
	 	(b)	 	any policy or contract of insurance contemplated by or referred to in
Clause 12 or any other provision of this Agreement or another Finance Document;
	 
	 	(c)	 	any other document contemplated by or referred to in any Finance Document;
and
	 
	 	(d)	 	any document which has been or is at any time sent by or to the Lender in
contemplation of or in connection with any Finance Document or any policy, contract
or document falling within paragraphs (b) or (c);

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

	 	(a)	 	England and Wales;
	 
	 	(b)	 	the country under the laws of which the company is incorporated or formed;
	 
	 	(c)	 	a country in which the company’s central management and control is or has
recently been exercised;
	 
	 	(d)	 	a country in which the overall net income of the company is subject to
corporation tax, income tax or any similar tax;
	 
	 	(e)	 	a country in which assets of the company (other than securities issued by,
or loans to, related companies) having a substantial value are situated, in which the
company maintains a permanent place of business, or in which a Security Interest
created by the company must or should be registered in order to ensure its validity
or priority; and
	 
	 	(f)	 	a country the courts of which have jurisdiction to make a winding up,
administration or similar order in relation to the company or which would have such
jurisdiction if their assistance were requested by the courts of a country referred
to in paragraphs (b) or (c) above;

	 	 	“Pertinent Matter” means:

	 	(a)	 	any transaction or matter contemplated by, arising out of, or connection
with a Pertinent Document; or
	 
	 	(b)	 	any statement relating to a Pertinent Document or to a transaction or
matter falling within paragraph (a),

7

 

	 	 	and covers any such transaction, matter or statement, whether entered into, arising or made
at any time before the signing of this Agreement or on or at any time after that signing;
	 
	 	 	“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;
	 
	 	 	“Related Company” of a person means any subsidiary of such person, any company or other
entity of which such person is a subsidiary and any subsidiary of any such company or
entity;
	 
	 	 	“Relevant Person” means the Borrower, the Corporate Guarantor, the Approved Manager, any
member of the Group, the Borrower’s Related Companies, any other Security Party and any
other Security Party’s Related Company;
	 
	 	 	“Repayment Date” means a date on which a repayment is required to be made under Clause 7;
	 
	 	 	“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”;
	 
	 	 	“Second Deed of Novation, Amendment and Restatement” means the deed of novation, amendment
and restatement dated June 2010 made between (i) the Borrower as new borrower, (ii)
the Seller as substituted borrower and (iii) the Lender setting out the terms and conditions
on which this Agreement shall be novated, amended and restated;
	 
	 	 	“Secured Liabilities” means all liabilities which the Borrower, the Security Parties or any
of them have, at the date of this Agreement or at any later time or times, under or in
connection with any Finance Document or any judgment relating to any Finance Document; and
for this purpose, there shall be disregarded any total or partial discharge of these
liabilities, or variation of their terms, which is effected by, or in connection with, any
bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any
country;
	 
	 	 	“Security Cover Ratio” means the ratio (expressed as a percentage) which is determined, at
any time, by comparing the aggregate of the amounts referred to in paragraphs (a) and (b) of
Clause 14.1 to the Loan;
	 
	 	 	“Security Interest” means:

	 	(a)	 	a mortgage, charge (whether fixed or floating) or pledge, any maritime or
other lien or any other security interest of any kind;
	 
	 	(b)	 	the security rights of a plaintiff under an action in rem; 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 this paragraph (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;

8

 

	 	 	“Security Party” means the Borrower, the Corporate Guarantor, the Approved Manager and any
other person who, as a surety or mortgagor, as a party to any subordination or priorities
arrangement, or in any similar capacity, executes a document falling within the last
paragraph of the definition of “Finance Documents”;
	 
	 	 	“Security Period” means the period commencing on the date of this Agreement and ending on
the date on which the Lender notifies the Borrower and the Security Parties that:

	 	(a)	 	all amounts which have become due for payment by the Borrower or any other
Security Party under the Finance Documents have been paid;
	 
	 	(b)	 	no amount is owing or has accrued (without yet having become due for
payment) under any Finance Document;
	 
	 	(c)	 	neither the Borrower nor any other Security Party has any future or
contingent liability under Clause 19, 20 or 21 or any other provision of this
Agreement or another Finance Document; and
	 
	 	(d)	 	the Lender does not consider that there is a significant risk that any
payment or transaction under a Finance Document would be set aside, or would have to
be reversed or adjusted, in any present or possible future bankruptcy of the Borrower
or a Security Party or in any present or possible future proceeding relating to a
Finance Document or any asset covered (or previously covered) by a Security Interest
created by a Finance Document;

	 	 	“Seller” means Grand Victoria Pte. Ltd., a company incorporated in Singapore whose
registered office is at 112 Robinson Road, #12-02, Robinson 112, Singapore 068902;
	 
	 	 	“Shares Pledge Option Agreement” means an agreement to create a pledge of all the shares in
the Borrower at the option of the Lender, executed or, as the context may require, to be
executed on the date of the Corporate Guarantee by the Corporate Guarantor as shareholder,
in such form as the Lender may approve or require;
	 
	 	 	“Ship” means the 2002-built Panamax bulk carrier of approximately 75,966 metric tons
deadweight currently registered in the ownership of the Seller under Singapore flag with the
name “GRAND VICTORIA” and to be purchased by the Borrower from the Seller pursuant to the
MOA and registered in its ownership under the Liberian flag with the name “NEWLEAD
VICTORIA”;
	 
	 	 	“Total Loss” means:

	 	(a)	 	actual, constructive, compromised, agreed or arranged total loss of the
Ship;
	 
	 	(b)	 	any expropriation, confiscation, requisition or acquisition of the Ship,
whether for full consideration, a consideration less than its proper value, a nominal
consideration or without any consideration, which is effected by any government or
official authority or by any person or persons claiming to be or to represent a
government or official authority (excluding a requisition for hire for a fixed period
not exceeding 1 year without any right to an extension) unless it is within 1 month
redelivered to the Borrower’s full control;
	 
	 	(c)	 	any arrest, capture, seizure or detention of the Ship (including any
hijacking or theft) unless it is within 1 month redelivered to the Borrower’s full
control; and

	 	 	“Total Loss Date” means:

9

 

	 	(a)	 	in the case of an actual loss of the Ship, the date on which it occurred
or, if that is unknown, the date when the Ship was last heard of;
	 
	 	(b)	 	in the case of a constructive, compromised, agreed or arranged total loss
of the 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 Borrower with the Ship’s insurers in which the insurers agree
to treat the Ship as a total loss; and

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

	1.2	 	Construction of certain terms. In this Agreement:
	 
	 	 	“approved” means, for the purposes of Clause 12, approved in writing by the Lender;
	 
	 	 	“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 the Ship in
consequence of its insured value being less than the value at which the Ship is assessed for
the purpose of such claims;
	 
	 	 	“expense” means any kind of cost, charge or expense (including all legal costs, charges and
expenses) and any applicable value added or other tax;
	 
	 	 	“law” includes any order or decree, any form of delegated legislation, 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 the Borrower is obliged to
effect, under Clause 12 or any other provision of this Agreement or another Finance
Document;
	 
	 	 	“person” includes any company; any state, political sub-division of a state and local or
municipal authority; and any international organisation;

10

 

	 	 	“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 in them of
clause 1 of the Institute Time Clauses (Hulls)(1/10/83) or (with respect to Insurances
commencing on or after 1/11/1995) clause 8 of the Institute Time Clauses (Hulls) (1/11/1995)
or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;
	 
	 	 	“regulation” includes any regulation, rule, official directive, request or guideline
whether or not having the force of law of any governmental, intergovernmental or
supranational body, agency, department or regulatory, self-regulatory or other authority or
organisation;
	 
	 	 	“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, in
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 (with respect to Insurances commencing on or after
1/11/1995) 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.
	 
	1.4	 	General Interpretation. In this Agreement:
	 
	(a)	 	references in Clause 1.1 to a Finance Document or any other document being in the form of a
particular appendix include references to that form with any modifications to that form which
the Lender approves or reasonably requires;
	 
	(b)	 	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;

11

 

	(c)	 	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;
	 
	(d)	 	words denoting the singular number shall include the plural and vice versa; and
	 
	(e)	 	Clauses 1.1 to 1.5 apply unless the contrary intention appears.
	 
	1.5	 	Headings. In interpreting a Finance Document or any provision of a Finance Document, all
clause, sub-clause and other headings in that and any other Finance Document shall be entirely
disregarded.
	 
	2	 	FACILITY
	 
	2.1	 	Amount of facility and Novation. Subject to:
	 
	(a)	 	the provisions of the First Deed of Novation, Amendment and Restatement (including, but not
limited to, the delivery and/or registration of certain security in respect to or over the
Ship) the Lender has made available to the Seller on 31 March 2010 a loan facility of
(originally) $27,500,000 in a single amount; and
	 
	(b)	 	the provisions of the Second Deed of Novation, Amendment and Restatement and further to the
acquisition of the Ship by the Borrower from the Seller pursuant to the terms of the MOA the
Borrower has agreed to assume the rights and obligations of the Seller under this Agreement.
	 
	2.2	 	Purpose of Loan. The Borrower undertakes with the Lender to use the Loan only for the
purpose stated in the preamble to this Agreement.
	 
	3	 	DRAWDOWN
	 
	3.1	 	Loan. The amount of the Loan which was originally drawndown by the Seller is $27,500,000 of
which the current principal outstandings on the date of the Second Deed of Novation Agreement
and Restatement are $27,500,000;
	 
	4	 	INTEREST
	 
	4.1	 	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 Borrower on the last day of that
Interest Period.
	 
	4.2	 	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 (a) the applicable
Margin, (b) LIBOR and (c) the Mandatory Cost (if any) for that Interest Period.
	 
	4.3	 	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.
	 
	4.4	 	Notification of market disruption. The Lender shall promptly notify the Borrower if no rate
is quoted on Reuters BBA Page LIBOR 01 or if for any reason the Lender is unable to obtain
Dollars in the London Interbank Market in order to fund the Loan (or any part of it) during
any Interest Period, stating the circumstances which have caused such notice to be given.
	 
	4.5	 	Suspension of drawdown. If the Lender’s notice under Clause 4.4 is served before the Loan is
advanced, the Lender’s obligation to advance the Loan shall be suspended while the
circumstances referred to in the Lender’s notice continue.

12

 

	4.6	 	Negotiation of alternative rate of interest. If the Lender’s notice under Clause 4.4 is
served after the Loan is advanced, the Borrower and the Lender shall use reasonable endeavours
to agree, within the 30 days after the date on which the Lender serves its notice under Clause
4.4 (the “Negotiation Period”), an alternative interest rate or (as the case may be) an
alternative basis for the Lender to fund or continue to fund the Loan during the Interest
Period concerned.
	 
	4.7	 	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.
	 
	4.8	 	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 Lender shall set an interest
period and interest rate representing the cost of funding of the Lender in Dollars or in any
available currency of the Loan plus the applicable Margin and the Mandatory Cost (if any); and
the procedure provided for by this Clause 4.8 shall be repeated if the relevant circumstances
are continuing at the end of the interest period so set by the Lender.
	 
	4.9	 	Notice of prepayment. If the Borrower does not agree with an interest rate set by the Lender
under Clause 4.8, the Borrower may give the Lender not less than 10 Business Days’ notice of
its intention to prepay at the end of the interest period set by the Lender.
	 
	4.10	 	Prepayment. A notice under Clause 4.9 shall be irrevocable; and on the last Business Day of
the interest period set by the Lender, the Borrower shall prepay (without premium or penalty)
the Loan, together with accrued interest thereon at the applicable rate plus the applicable
Margin and the Mandatory Cost (if any).
	 
	4.11	 	Application of prepayment. The provisions of Clause 7 shall apply in relation to the
prepayment.
	 
	4.12	 	Calculation of Security Cover Ratio. The Lender shall calculate the Security Cover Ratio on
the Drawdown Date, on 30 June 2010 and every 3 months thereafter or any other date as may be
agreed between the Lender and the Borrower (each a “Review Date”) and shall advise the
Borrower in writing, within 10 Business Days of each Review Date, of the applicable Margin
which will apply until the date falling one day prior to the next Review Date Provided that
in respect of each Review Date other than the first Review Date, the Lender shall only be
obliged to advise the Borrower of the applicable Margin which will apply for the Interest
Period commencing on the relevant Review Date if that Margin will be different to the Margin
which applied immediately prior to the relevant Review Date.
	 
	 	 	For the purposes of calculating the Security Cover Ratio pursuant to this Clause 4.12, the
Market Value of the Ship shall be determined no more than 14 days prior to the relevant
Review Date.
	 
	5	 	INTEREST PERIODS
	 
	5.1	 	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.
	 
	5.2	 	Duration of normal Interest Periods. Subject to Clauses 5.3 and 5.4, each Interest Period
shall be:
	 
	(a)	 	3, 6 or 9 months as notified by the Borrower to the Lender not later than 11.00 a.m. (Athens
time) 3 Business Days before the commencement of the Interest Period; or

13

 

	(b)	 	3 months, if the Borrower fails to notify the Lender by the time specified in paragraph (a);
or
	 
	(c)	 	such other period as the Lender may agree with the Borrower.
	 
	5.3	 	Duration of Interest Periods for repayment instalments. In respect of an amount due to be
repaid under Clause 7 on a particular Repayment Date, an Interest Period shall end on that
Repayment Date.
	 
	5.4	 	Non-availability of matching deposits for Interest Period selected. If, after the Borrower
has selected and the Lender has agreed an Interest Period longer than 3 months, the Lender
notifies the Borrower by 11.00 a.m. (Athens time) on the third 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, the Interest Period shall be of 3 months duration.
	 
	6	 	DEFAULT INTEREST
	 
	6.1	 	Payment of default interest on overdue amounts. The Borrower shall pay interest in
accordance with the following provisions of this Clause 6 on any amount payable by the
Borrower under any Finance Document which the Lender, or other designated payee does not
receive on or before the relevant date, that is:
	 
	(a)	 	the date on which the Finance Documents provide that such amount is due for payment; or
	 
	(b)	 	if a Finance Document provides that such amount is payable on demand, the date on which the
demand is served; or
	 
	(c)	 	if such amount has become immediately due and payable under Clause 18.4, the date on which it
became immediately due and payable.
	 
	6.2	 	Default rate of interest. Interest shall accrue on an overdue amount from (and including)
the relevant date until the date of actual payment (as well after as before judgment) at the
rate per annum determined by the Lender to be 2 per cent. above:
	 
	(a)	 	in the case of an overdue amount of principal, the higher of the rates set out at paragraphs
(a) and (b) of Clause 6.3; or
	 
	(b)	 	in the case of any other overdue amount, the rate set out at paragraph (b) of Clause 6.3.
	 
	6.3	 	Calculation of default rate of interest. The rates referred to in Clause 6.2 are:
	 
	(a)	 	the rate applicable to the overdue principal amount immediately prior to the relevant date
(but only for any unexpired part of any then current Interest Period);
	 
	(b)	 	the aggregate of the Mandatory Cost (if any) and the applicable Margin plus, in respect of
successive periods of any duration (including at call) up to 3 months which the Lender may
select from time to time:

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

14

 

	6.4	 	Notification of interest periods and default rates. The Lender shall promptly notify the
Borrower of each interest rate determined by the Lender under Clause 6.3 and of each period
selected by the Lender for the purposes of paragraph (b) of that Clause; but this shall not be
taken to imply that the Borrower is liable to pay such interest only with effect from the date
of the Lender’s notification.
	 
	6.5	 	Payment of accrued default interest. Subject to the other provisions of this Agreement, any
interest due under this Clause shall be paid on the last day of the period by reference to
which it was determined; and the payment shall be made to the Lender for the account if the
Lender to which the overdue amount is due.
	 
	6.6	 	Compounding of default interest. Any such interest which is not paid at the end of the
period by reference to which it was determined shall thereupon be compounded.
	 
	7	 	REPAYMENT AND PREPAYMENT
	 
	7.1	 	The Borrower shall repay the Loan:
	 
	(a)	 	by 36 consecutive 3-monthly repayment instalments:

	 	(i)	 	subject to Clause 7.7(b), in the case of the first to the twentieth instalments
(inclusive), in the amount of $375,000 each;
	 
	 	(ii)	 	in the case of the twenty-first to the thirty-sixth instalments (inclusive), in
the amount of $475,000 each; and

	(b)	 	subject to Clause 7.11, a balloon instalment of $12,400,000 (the “Balloon Instalment”)
payable together with the thirty-sixth repayment instalment.
	 
	7.2	 	Repayment Dates. The first repayment instalment in respect of the Loan shall be repaid on 31
June 2010 and each subsequent repayment instalment shall be repaid at 3-monthly intervals
thereafter and the last repayment instalment, together with the Balloon Instalment, shall be
repaid on 31 January 2019.
	 
	7.3	 	Final Repayment Date. On the final Repayment Date, the Borrower shall additionally pay to
the Lender for the account of the Lender all other sums then accrued or owing under any
Finance Document.
	 
	7.4	 	Voluntary prepayment. Subject to the following conditions, the Borrower may prepay the whole
or any part of the Loan on the last day of an Interest Period without penalty or premium
pursuant to Clause 7.8.
	 
	7.5	 	Conditions for voluntary prepayment. The conditions referred to in Clause 7.4 are that:
	 
	(a)	 	a partial prepayment shall be $1,000,000 or a multiple thereof or any other amount mutually
agreed between the Borrower and the Lender;
	 
	(b)	 	the Lender has received from the Borrower at least 5 Business Days’ prior written notice
specifying the amount to be prepaid and the date on which the prepayment is to be made;
	 
	(c)	 	the Borrower has provided evidence satisfactory to the Lender that any consent required by
the Borrower or any other Security Party in connection with the prepayment has been obtained
and remains in force, and that any regulation relevant to this Agreement which affects the
Borrower or any other Security Party has been complied with.
	 
	7.6	 	Effect of notice of prepayment. A prepayment notice may not be withdrawn or amended without
the consent of the Lender and the amount specified in the prepayment

15

 

	 	 	notice shall become due and payable by the Borrower on the date for prepayment specified
in the prepayment notice.
	 
	7.7	 	Mandatory prepayment. The Borrower shall be obliged to prepay:
	 
	(a)	 	the whole of the Loan:

	 	(i)	 	if the Ship is sold, on or before the date on which the sale is completed by
delivery of the Ship to the buyer; or
	 
	 	(ii)	 	if the Ship becomes a Total Loss, on the earlier of the date falling 150 days
after the Total Loss Date and the date of receipt by the Lender of the proceeds of
insurance relating to such Total Loss; and

	(b)	 	30 Business Days of the Lender’s demand, an amount of the Loan required to ensure that the
Security Cover Ratio is at least equal to 125 per cent. if the Lender determines that the
Security Cover Ratio as at 31 December 2012 is less than 125 per cent.
	 
	7.8	 	Amounts payable on prepayment. A prepayment shall be made together with accrued interest
(and any other amount payable under Clause 20 or otherwise) in respect of the amount prepaid
and, if the prepayment is not made on the last day of an Interest Period together with any
sums payable under Clause 20.1(b) but without premium or penalty.
	 
	7.9	 	Application of partial prepayment. Each partial prepayment shall be applied pro-rata against
the then outstanding repayment instalments referred to in Clause 7.1 and the Balloon
Instalment.
	 
	7.10	 	No reborrowing. No amount prepaid may be reborrowed.
	 
	7.11	 	Prepayment out of Excess Earnings. If on 31 March, 30 June, 30 September and 31 December in
each calendar year during the Security Period (each an “Excess Cash Calculation Date”), with
the first such 3-month period commencing on 1 April 2010, the Lender determines (on the basis
of the individual accounts as provided under Clause 10.6(c)) that the aggregate of the daily
Earnings of the Ship for such 3-month period exceeds the aggregate of:
	 
	(a)	 	the expenditure necessarily incurred during such 3-month period by the Borrower in operating,
insuring, maintaining, repairing and generally trading the Ship (but excluding any exceptional
and extraordinary expenses);
	 
	(b)	 	sums paid by the Borrower in respect of principal on, and interest in respect of, the Loan
pursuant to this Agreement during such 3-month period;
	 
	(c)	 	general and administrative expenditure properly and reasonably incurred by the Borrower
during such 3-month period; and
	 
	(d)	 	7.6/145ths of the interest payable during such 3-month period pursuant to the Bond
(subject to such interest payments not exceeding $500,000 per annum for the purposes of this
Clause 7.11(d)),
	 
	 	 	then the Borrower shall within 75 days of the relevant Excess Cash Calculation Date, pay to
the Lender an amount equal to the Relevant Percentage of such excess which amount shall be
applied by the Lender against the Balloon Instalment (and the Borrower hereby irrevocably
authorises the Lender to make such application),
	 
	 	 	Provided that the Borrower’s obligations under this Clause 7.11 shall cease when the
Balloon Instalment has been reduced to $6,000,000.

16

 

	 	 	In this Clause 7.11, “Relevant Percentage” means:

	 	(i)	 	if, on the relevant Excess Cash Calculation Date, the Borrower is in compliance
with Clause 14.1, 50 per cent.; and
	 
	 	(ii)	 	if, on the relevant Excess Cash Calculation Date, the Borrower is not in
compliance with Clause 14.1, 100 per cent.

	8	 	CONDITIONS PRECEDENT
	 
	8.1	 	Documents, fees and no default. The Lender’s obligation to advance the Loan is subject to
the following conditions precedent:
	 
	(a)	 	that, on or before the date of the Second Deed of Novation, Amendment and Restatment, the
Lender receives the documents described in Schedule 1 in form and substance satisfactory to it
and its lawyers;
	 
	(b)	 	that both at the date of the Second Deed of Novation, Amendment and Restatment:

	 	(i)	 	no Event of Default has occurred and is continuing or would result from the
borrowing of the Loan;
	 
	 	(ii)	 	the representations and warranties in Clause 9.1 and those of the Borrower or
any other Security Party which are set out in the other Finance Documents would be true
and not misleading if repeated on each of those dates with reference to the
circumstances then existing;
	 
	 	(iii)	 	none of the circumstances contemplated by Clause 4.4 has occurred and is
continuing; and
	 
	 	(iv)	 	there has been no material adverse change in the financial position, state of
affairs or prospects of the Borrower or any other Security Party in the light of which
the Lender considers that there is a significant risk that the Borrower or any other
Security Party will later become, unable to discharge its liabilities under the Finance
Documents to which it is a party as they fall due; and

	(c)	 	that, if the ratio set out in Clause 14.1 were applied immediately following the advance of
the Loan, the Borrower would not be obliged to provide additional security or prepay part of
the Loan under that Clause; and
	 
	(d)	 	that the Lender has received, and found to be acceptable to it, any further opinions,
consents, agreements and documents in connection with the Finance Documents which the Lender
may request by notice to the Borrower prior to the Drawdown Date.
	 
	8.2	 	Waivers of conditions precedent. If the Lender, at its discretion, permits the Loan to be
borrowed before certain of the conditions referred to in Clause 9.1 are satisfied, the
Borrower shall ensure that those conditions are satisfied within 5 Business Days after the
Drawdown Date (or such longer period as the Lender may specify).
	 
	9	 	REPRESENTATIONS AND WARRANTIES
	 
	9.1	 	General. The Borrower represents and warrants to the Lender as follows.
	 
	9.2	 	Status. The Borrower is duly incorporated and validly existing and in good standing under
the laws of Liberia.
	 
	9.3	 	Share capital and ownership. The authorised share capital of the Borrower divided into 500
registered and/or bearer shares of no par value, all of which shares have been issued

17

 

	 	 	and the legal title and beneficial ownership of all those shares is held free of any
Security Interest or other claim by the Corporate Guarantor.
	 
	9.4	 	Corporate power. The Borrower has the corporate capacity, and has taken all corporate action
and obtained all consents necessary for it:
	 
	(a)	 	to register the Ship in its name under the Liberian flag;
	 
	(b)	 	to execute the Finance Documents to which the Borrower is a party; and
	 
	(c)	 	to borrow under this Agreement, and to make all the payments contemplated by, and to comply
with this Agreement and the other Finance Documents to which the Borrower is a party.
	 
	9.5	 	Consents in force. All the consents referred to in Clause 9.4 remain in force and nothing
has occurred which makes any of them liable to revocation.
	 
	9.6	 	Legal validity; effective Security Interests. The Finance Documents to which the Borrower is
a party, do now or, as the case may be, will, upon execution and delivery (and, where
applicable, registration as provided for in the Finance Documents):
	 
	(a)	 	constitute the Borrower’s legal, valid and binding obligations enforceable against the
Borrower in accordance with their respective terms; and
	 
	(b)	 	create legal, valid and binding Security Interests enforceable in accordance with their
respective terms over all the assets to which they, by their terms, relate,
	 
	 	 	subject to any relevant insolvency laws affecting creditors’ rights generally.
	 
	9.7	 	No third party Security Interests. Without limiting the generality of Clause 9.6, at the
time of the execution and delivery of each Finance Document:
	 
	(a)	 	the Borrower will have the right to create all the Security Interests which that Finance
Document purports to create; and
	 
	(b)	 	no third party will have any Security Interest 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.
	 
	9.8	 	No conflicts. The execution by the Borrower of each Finance Document and the borrowing by
the Borrower of the Loan, and the Borrower’s compliance with each Finance Document will not
involve or lead to a contravention of:
	 
	(a)	 	any law or regulation; or
	 
	(b)	 	the constitutional documents of the Borrower; or
	 
	(c)	 	any contractual or other obligation or restriction which is binding on the Borrower or any of
its assets.
	 
	9.9	 	No withholding taxes. All payments which the Borrower is liable to make under the Finance
Documents may be made without deduction or withholding for or on account of any tax payable
under any law of any Pertinent Jurisdiction.
	 
	9.10	 	No default. No Event of Default has occurred and is continuing.
	 
	9.11	 	Information. All information which has been provided in writing by or on behalf of the
Borrower or any other Security Party to the Lender in connection with any Finance Document
satisfied the requirements of Clause 10.5; all accounts which have been so

18

 

	 	 	provided satisfied the requirements of Clause 10.7; and there has been no material adverse
change in the financial position or state of affairs of either the Borrower or the Approved
Manager or any member of the Group which may (in the opinion of the Lender) affect the
ability of the Borrower or any other Security Party to comply with the terms of and/or
perform its obligations under this Agreement and the Financial Documents.
	 
	9.12	 	No litigation. No legal or administrative action involving the Borrower (including, without
limitation, any action relating to any alleged or actual breach of the ISM Code and the ISPS
Code) has been commenced or taken or, to the Borrower’s knowledge, is likely to be commenced
or taken which, in either case, would be likely to have a material adverse effect on the
Borrower’s financial position or profitability.
	 
	9.13	 	No liabilities. As at the date of the Second Deed of Novation, Amendment and Restatement, to
the Borrower’s knowledge, there are no existing or potential liabilities of the Borrower other
than those already disclosed to the Lender in writing.
	 
	9.14	 	Compliance with certain undertakings. At the date of this Agreement, the Borrower is in
compliance with Clauses 10.2, 10.4, 10.9 and 10.13.
	 
	9.15	 	Taxes paid. The Borrower has paid all taxes applicable to, or imposed on or in relation to
the Borrower, its business or the Ship.
	 
	9.16	 	No money laundering. Without prejudice to the generality of Clause 2.2, in relation to the
borrowing by the Borrower of the Loan, the performance and discharge of its obligations and
liabilities under the Finance Documents, and the transactions and other arrangements effected
or contemplated by the Finance Documents to which the Borrower is a party, the Borrower
confirms (i) that it is acting for its own account, (ii) that it will use the proceeds of the
Loan for its own benefit, under its 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 requirement or other regulatory measure or procedure
implemented to combat “money laundering” (as defined in Article 1 of the Directive
(91/308/EEC) of the Council of the European Communities).
	 
	10	 	GENERAL UNDERTAKINGS
	 
	10.1	 	General. The Borrower undertakes with the Lender to comply with the following provisions of
this Clause 10 at all times during the Security Period, except as the Lender may otherwise
permit.
	 
	10.2	 	Title; negative pledge and pari passu ranking. The Borrower will:
	 
	(a)	 	hold the legal title to, and own the entire beneficial interest in the Ship, the 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 the effect of assignments contained in
the Finance Document;
	 
	(b)	 	not create or permit to arise any Security Interest over any other asset, present or future;
and
	 
	(c)	 	procure that its liabilities under the Finance Documents to which it is party do and will
rank at least pari passu with all other present and future insecured liabilities, except for
Liabilities which are mandatorily preferred by law.
	 
	10.3	 	No disposal of assets. The Borrower will not transfer, lease or otherwise dispose of:
	 
	(a)	 	all or a substantial part of its assets, whether by one transaction or a number of
transactions, whether related or not; or

19

 

	(b)	 	any debt payable to it or any other right (present, future or contingent right) to receive a
payment, including any right to damages or compensation.
	 
	10.4	 	No other liabilities or obligations to be incurred. The Borrower will not incur any
liability or obligation except liabilities and obligations under the Finance Documents to
which it is a party and liabilities or obligations reasonably incurred in the ordinary course
of operating and chartering the Ship.
	 
	10.5	 	Information provided to be accurate. All financial and other information which is provided
in writing by or on behalf of the Borrower and/or any other member of the Group under or in
connection with any Finance Document will be true and not misleading and will not omit any
material fact or consideration.
	 
	10.6	 	Provision of financial statements. The Borrower will send to the Lender or, as the case may
be, procure there are sent to the Lender:
	 
	(a)	 	as soon as possible, but in no event later than 180 days after the end of each financial year
of the Corporate Guarantor and the Borrower, the audited consolidated accounts of the Group
and the audited individual accounts of the Borrower;
	 
	(b)	 	as soon as possible, but in no event later than 90 days after the end of each 6-month period
in each financial year of the Corporate Guarantor ending on 30 June and 31 December, the
unaudited consolidated accounts of the Group certified as to their correctness by the chief
financial officer of the Corporate Guarantor;
	 
	(c)	 	as soon as possible, but in no event later than 60 days after the end of each 3-month period
in each financial year of the Borrower (ending on 31 March, 30 June, 30 September and 31
December), the unaudited individual accounts of the Borrower certified as to their correctness
by the chief financial officer of the Borrower; and
	 
	(d)	 	as soon as possible, but in no event later than 31 December in each year, a budget in a
format approved by the Lender which shows all anticipated income and expenditure of the Ship
during the next financial year of the Borrower.
	 
	10.7	 	Form of financial statements. All accounts delivered under Clause 10.6 will:
	 
	(a)	 	be prepared in accordance with all applicable laws and generally accepted accounting
principles consistently applied;
	 
	(b)	 	give a true and fair view of the state of affairs of the Borrower or, as the case may be, the
Group at the date of those financial statements and of their profit for the period to which
those accounts relate; and
	 
	(c)	 	fully disclose or provide for all significant liabilities of the Borrower or, as the case may
be, the Group.
	 
	10.8	 	Shareholder and creditor notices. In case of an Event of Default, the Borrower will send the
Lender, at the same time as they are despatched, copies of all communications which are
despatched to the Borrower’s shareholders or creditors or any class of them.
	 
	10.9	 	Consents. The Borrower will maintain in force and promptly obtain or renew, and will
promptly send certified copies to the Lender of, all consents required:
	 
	(a)	 	for the Borrower to perform its obligations under any Finance Document;
	 
	(b)	 	for the validity or enforceability of any Finance Document; and
	 
	(c)	 	for the Borrower to own and operate the Ship,

20

 

	 	 	and the Borrower will comply with the terms of all such consents.
	 
	10.10	 	Maintenance of Security Interests. The Borrower will:
	 
	(a)	 	at its own cost, do all that it reasonably can to ensure that any Finance Document validly
creates the obligations and the Security Interests which it purports to create; and
	 
	(b)	 	without limiting the generality of paragraph (a), at its own cost, promptly register, file,
record or enrol any Finance Document with any court or authority in all Pertinent
Jurisdictions, pay any stamp, registration or similar tax in all Pertinent Jurisdictions in
respect of any Finance Document, give any notice or take any other step which may be or 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.
	 
	10.11	 	Notification of litigation. The Borrower will provide the Lender with details of any legal
or administrative action involving the Borrower, any other Security Party, or the Ship, the
Earnings or the Insurances as soon as such action is instituted or it becomes apparent to the
Borrower that it is likely to be instituted, unless it is clear that the legal or
administrative action cannot be considered material in the context of any Finance Document.
	 
	10.12	 	Principal place of business. The Borrower will maintain its place of business, and keep its
corporate documents and records, at the address stated at Clause 27.2(a); and will not
establish, or do anything as a result of which it would be deemed to have a place of business
in any other country other than Liberia or Greece.
	 
	10.13	 	Confirmation of no default. The Borrower will, within 3 Business Days after service by the
Lender of a written request, serve on the Lender a notice which is signed by 2 directors of
the Borrower and which:
	 
	(a)	 	states that no Event of Default has occurred; or
	 
	(b)	 	states that no Event of Default has occurred, except for a specified event or matter, of
which all material details are given.
	 
	10.14	 	Notification of default. The Borrower will notify the Lender as soon as it becomes aware
of:
	 
	(a)	 	the occurrence of an Event of Default; or
	 
	(b)	 	any matter which indicates that an Event of Default may have occurred,
	 
	 	 	and will keep the Lender fully up-to-date with all developments.
	 
	10.15	 	Ownership. Subject to Clause 10.19, the Borrower shall procure that there is no change in
the legal or beneficial ownership of the shares in the Borrower throughout the Security
Period, or any change in the management of the Borrower.
	 
	10.16	 	Provision of further information. The Borrower will, as soon as practicable after receiving
the request, provide the Lender with any additional financial or other information relating
to:
	 
	(a)	 	the Borrower, the Ship, the Earnings or the Insurances; or
	 
	(b)	 	any other matter relevant to, or to any provision of, a Finance Document; and
	 
	(c)	 	which may be requested by the Lender at any time.

21

 

	10.17	 	ISM Code and ISPS Code compliance. The Borrower will ensure that all requirements of the
ISM Code and the ISPS Code as they relate to the Borrower, the Approved Manager and the Ship
have been complied with.
	 
	10.18	 	Provision of “know your customer” information. The Borrower will, as soon as practicable
after receiving a request from the Lender, provide the Lender with any information required by
it in relation to its “know your customer” regulations.
	 
	11	 	CORPORATE UNDERTAKINGS
	 
	11.1	 	General. The Borrower also undertakes with the Lender to comply with the following
provisions of this Clause 11 at all times during the Security Period except as the Lender may
otherwise permit.
	 
	11.2	 	Maintenance of status. The Borrower will maintain its separate corporate existence and
remain in good standing under the laws of Liberia.
	 
	11.3	 	Negative undertakings. The Borrower will not:
	 
	(a)	 	carry on any business other than the ownership, chartering and operation of the Ship; or
	 
	(b)	 	pay any dividend or make any other form of distribution or effect any form of redemption,
purchase or return of share capital Provided that the Borrower may pay a dividend or make any
other form of distribution with the prior written consent of the Lender and if at that time an
Event of Default has not occurred or will result from the payment of such dividend or the
making of such other form of distribution; or
	 
	(c)	 	provide any form of credit or financial assistance to:

	 	(i)	 	a person who is directly or indirectly interested in the Borrower’s share or
loan capital; or
	 
	 	(ii)	 	any company in or with which such a person is directly or indirectly interested
or connected;
	 
	 	(iii)	 	or enter into any transaction with or involving such a person or company on
terms which are, in any respect, less favourable to the Borrower than those which it
could obtain in a bargain made at arms’ length;

	(d)	 	open or maintain any account with any bank or financial institution other than the Lender for
the purposes of the Finance Documents;
	 
	(e)	 	issue, allot or grant any person a right to any shares in its capital or repurchase or reduce
its issued share capital;
	 
	(f)	 	acquire any shares or other securities other than US or UK Treasury bills and certificates of
deposit issued by major North American or European banks, or enter into any transaction in a
derivative; or
	 
	(g)	 	enter into any form of amalgamation, merger or de-merger or any form of reconstruction or
reorganisation.
	 
	11.4	 	Minimum Liquidity. The Borrower shall ensure that at all times during the Security Period,
an amount of at least $250,000 is standing to the credit of the Holding Account.

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	12	 	INSURANCE
	 
	12.1	 	General. The Borrower also undertakes with the Lender to comply with the following
provisions of this Clause 12 at all times during the Security Period except as the Lender may
otherwise permit.
	 
	12.2	 	Maintenance of obligatory insurances. The Borrower shall keep the Ship insured at its
expense against:
	 
	(a)	 	fire and usual marine risks (including hull and machinery, loss of hire and excess risks);
	 
	(b)	 	war risks;
	 
	(c)	 	protection and indemnity risks; and
	 
	(d)	 	any other risks against which the Lender considers, having regard to practices and other
circumstances prevailing at the relevant time, it would in the opinion of the Lender be
reasonable for the Borrower to insure and which are specified by the Lender by notice to the
Borrower.
	 
	12.3	 	Terms of obligatory insurances. The Borrower shall effect such insurances:
	 
	(a)	 	in Dollars;
	 
	(b)	 	in the case of fire and usual marine risks and war risks, in an amount on an agreed value
basis of at least the greater of (i) an amount equal to 110 per cent. of the Loan and (ii) the
Market Value of the Ship; and
	 
	(c)	 	in the case of oil pollution liability risks, for an aggregate amount equal to the highest
level of cover from time to time available under basic protection and indemnity club entry and
in the international marine insurance market (currently $1,000,000,000);
	 
	(d)	 	in relation to protection and indemnity risks, in respect of the full tonnage of the Ship
owned by it;
	 
	(e)	 	on approved terms; and
	 
	(f)	 	through approved brokers and with approved insurance companies and/or underwriters or, in the
case of war risks and protection and indemnity risks, in approved war risks and protection and
indemnity risks associations.
	 
	12.4	 	Further protections for the Lender. In addition to the terms set out in Clause 12.3, the
Borrower shall procure that the obligatory insurances shall:
	 
	(a)	 	whenever the Lender requires name (or be amended to name) the Lender as additional named
assured for its rights and interests, warranted no operational interest and with full waiver
of rights of subrogation against the Lender, but without the Lender thereby being liable to
pay (but having the right to pay) premiums, calls or other assessments in respect of such
insurance;
	 
	(b)	 	name the Lender as loss payee with such directions for payment as the Lender may specify;
	 
	(c)	 	provide that all payments by or on behalf of the insurers under the obligatory insurances to
the Lender shall be made without set-off, counterclaim or deductions or condition whatsoever;

23

 

	(d)	 	provide that the insurers shall waive, to the fullest extent permitted by English law, their
entitlement (if any) (whether by statute, common law, equity, or otherwise) to be subrogated
to the rights and remedies of the Lender in respect of any rights or interests (secured or
not) held by or available to the Lender in respect of the Secured Liabilities, until the
Secured Liabilities shall have been fully repaid and discharged, except that the insurers
shall not be restricted by the terms of this paragraph (d) from making personal claims against
persons (other than the Borrower or the Lender) in circumstances where the insurers have fully
discharged their liabilities and obligations under the relevant obligatory insurances;
	 
	(e)	 	provide that such obligatory insurances shall be primary without right of contribution from
other insurances which may be carried by the Lender;
	 
	(f)	 	provide that the Lender may make proof of loss if the Borrower fails to do so;
	 
	(g)	 	provide that if any obligatory insurance is cancelled, or if any substantial change is made
in the coverage which adversely affects the interest of the Lender, or if any obligatory
insurance is allowed to lapse for non-payment of premium, such cancellation, charge or lapse
shall not be effective with respect to the Lender for 30 days (or 7 days in the case of war
risks) after receipt by the Lender of prior written notice from the insurers of such
cancellation, change or lapse.
	 
	12.5	 	Renewal of obligatory insurances. The Borrower shall:
	 
	(a)	 	at least 21 days before the expiry of any obligatory insurance:

	 	(i)	 	notify the Lender of the brokers (or other insurers) and any protection and
indemnity or war risks association through or with whom the Borrower proposes to renew
that obligatory insurance and of the proposed terms of renewal; and
	 
	 	(ii)	 	obtain the Lender’s approval to the matters referred to in paragraph (i);

	(b)	 	at least 14 days before the expiry of any obligatory insurance, renew that obligatory
insurance in accordance with the Lender’s approval pursuant to paragraph (a); and
	 
	(c)	 	procure that the approved brokers and/or the war risks and protection and indemnity
associations with which such a renewal is effected shall promptly after the renewal notify the
Lender in writing of the terms and conditions of the renewal.
	 
	12.6	 	Copies of policies; letters of undertaking. The Borrower shall ensure that all approved
brokers provide the Lender with pro forma copies of all policies relating to the obligatory
insurances which they are to effect or renew and of a letter or letters or undertaking in a
form required by the Lender 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 12.4;
	 
	(b)	 	they will hold such policies, and the benefit of such insurances, to the order of the Lender
in accordance with the said loss payable clause;
	 
	(c)	 	they will advise the Lender immediately of any material change to the terms of the obligatory
insurances;
	 
	(d)	 	they will notify the Lender in writing, not less than 14 days before the expiry of the
obligatory insurances, in the event of their not having received notice of renewal
instructions from the Borrower or its agents and, in the event of their receiving instructions
to renew, they will promptly notify the Lender of the terms of the instructions; and

24

 

	(e)	 	they will not set off against any sum recoverable in respect of a claim relating to the
Ship under such obligatory insurances any premiums or other amounts due to them or any other
person whether in respect of the Ship or otherwise, they waive any lien on the policies
(including, without limitation, any fleet lien), or any sums received under them, which they
might have in respect of such premiums or other amounts, and they will not cancel such
obligatory insurances by reason of non-payment of such premiums or other amounts, and will
arrange for a separate policy to be issued in respect of the Ship forthwith upon being so
requested by the Lender.
	 
	12.7	 	Copies of certificates of entry. The Borrower shall ensure that any protection and indemnity
and/or war risks associations in which the Ship is entered provides the Lender with:
	 
	(a)	 	a certified copy of the certificate of entry for the Ship;
	 
	(b)	 	a letter or letters of undertaking in such form as may be required by the Lender;
	 
	(c)	 	where required to be issued under the terms of insurance/indemnity provided by the Borrower’s
protection and indemnity association, a certified copy of each United States of America voyage
quarterly declaration (or other similar document or documents) made by the Borrower in
relation to the Ship in accordance with the requirements of such protection and indemnity
association; and
	 
	(d)	 	a certified copy of each certificate of financial responsibility for pollution by oil or
other Environmentally Sensitive Material issued by the relevant certifying authority in
relation to the Ship.
	 
	12.8	 	Deposit of original policies. The Borrower shall ensure that all policies relating to
obligatory insurances are deposited with the approved brokers through which the insurances are
effected or renewed.
	 
	12.9	 	Payment of premiums. The Borrower 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
Lender.
	 
	12.10	 	Guarantees. The Borrower 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.
	 
	12.11	 	Restrictions on employment. The Borrower shall not employ the Ship, nor permit her to be
employed, outside the cover provided by any obligatory insurances.
	 
	12.12	 	Compliance with terms of insurances. The Borrower 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 under an
obligatory insurance repayable in whole or in part; and, in particular:
	 
	(a)	 	the Borrower 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 12.7 (c)) ensure that the obligatory insurances are not made subject to
any exclusions or qualifications to which the Lender has not given its prior approval;
	 
	(b)	 	the Borrower shall not make any changes relating to the classification or classification
society or manager or operator of the Ship approved by the underwriters of the obligatory
insurances;
	 
	(c)	 	the Borrower shall make (and promptly supply copies to the Lender of) all quarterly or other
voyage declarations which may be required by the protection and indemnity risks

25

 

	 	 	association in which the Ship is entered to maintain cover for trading to the United States
of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act
1990 or any other applicable legislation); and
	 
	(d)	 	the Borrower shall not employ the Ship, 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.
	 
	12.13	 	Alteration to terms of insurances. The Borrower shall neither make nor agree to any
alteration to the terms of any obligatory insurance nor waive any right relating to any
obligatory insurance.
	 
	12.14	 	Settlement of claims. The Borrower shall not settle, compromise or abandon any claim under
any obligatory insurance for Total Loss or for a Major Casualty, and the Borrower shall do all
things necessary and provide all documents, evidence and information to enable the Lender to
collect or recover any moneys which at any time become payable in respect of the obligatory
insurances.
	 
	12.15	 	Provision of copies of communications. The Borrower shall provide the Lender, at the time
of each such communication, copies of all written communications between itself 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)	 	the Borrower’s obligations relating to the obligatory insurances including,
without limitation, all requisite declarations and payments of additional premiums or
calls; and
	 
	 	(ii)	 	any credit arrangements made between the Borrower and any of the persons
referred to in paragraphs (a) or (b) relating wholly or partly to the effecting or
maintenance of the obligatory insurances.

	12.16	 	Provision of information. In addition, the Borrower shall promptly provide the Lender (or
any persons which it may designate) with any information which the Lender (or any such
designated person) requests for the purpose of:
	 
	(a)	 	obtaining or preparing any report from an independent marine insurance broker as to the
adequacy of the obligatory insurances effected or proposed to be effected; and/or
	 
	(b)	 	effecting, maintaining or renewing any such insurances as are referred to in Clause 12.17
below or dealing with or considering any matters relating to any such insurances;
	 
	 	 	and the Borrower shall, forthwith upon demand, indemnify the Lender in respect of all fees
and other expenses incurred by or for the account of the Lender in connection with any such
report as is referred to in paragraph (a).
	 
	12.17	 	Mortgagee’s interest insurance. The Lender shall be entitled from time to time to effect,
maintain and renew on such terms, through such insurers and generally in such manner as the
Lender may from time to time consider appropriate a mortgagee’s interest marine insurance in
relation to the Ship in an amount equal to at least 110 per cent. of the Loan providing for
the indemnification of the Lender for any losses under or in connection with any Finance
Document which directly or indirectly result from loss of or

26

 

	 	 	damage to either Ship or a liability of either Ship or of either Owner, being a loss or
damage which is prima facie covered by an obligatory insurance but in respect of which there
is a non-payment (or reduced payment) by the underwriters by reason of, or on the basis of
an allegation concerning:
	 
	(a)	 	any act or omission on the part of the Borrower, of any operator, charterer, manager or
sub-manager of the Ship or of any officer, employee or Lender of the Borrower or of any such
person, including any breach of warranty or condition or any non-disclosure relating to such
obligatory insurance;
	 
	(b)	 	any act or omission, whether deliberate, negligent or accidental, or any knowledge or privity
of the Borrower, any other person referred to in paragraph (i) above, or of any officer,
employee or agent of the Borrower or of such a person, including the casting away or damaging
of the Ship and/or the Ship being unseaworthy; and/or
	 
	(c)	 	any other matter capable of being insured against under a mortgagee’s interest marine
insurance policy whether or not similar to the foregoing,
	 
	 	 	and the Borrower shall upon demand fully indemnify the Lender 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.
	 
	12.18	 	Review of insurance requirements. The Lender shall be entitled to review the requirements
of this Clause 12 from time to time in order to take account of any changes in circumstances
after the date of this Agreement which are, in the opinion of the Lender, significant and
capable of affecting the Borrower or the Ship and its or their insurance (including, without
limitation, changes in the availability or the cost of insurance coverage or the risks to
which the Borrower may be subject), and may appoint insurance consultants in relation to this
review at the cost of the Borrower.
	 
	12.19	 	Modification of insurance requirements. The Lender shall notify the Borrower of any
proposed modification under Clause 12.18 to the requirements of this Clause 12 which the
Lender consider appropriate in the circumstances, and such modification shall take effect on
and from the date it is notified in writing to the Borrower as an amendment to this Clause 12
and shall bind the Borrower accordingly.
	 
	12.20	 	Compliance with mortgagee’s instructions. The Lender shall be entitled (without prejudice
to or limitation of any other rights which it may have or acquire under any Finance Document)
to require the Ship to remain at any safe port or to proceed to and remain at any safe port
designated by the Lender until the Borrower implements any amendments to the terms of the
obligatory insurances and any operational changes required as a result of a notice served
under Clause 12.19.
	 
	13	 	SHIP COVENANTS
	 
	13.1	 	General. The Borrower also undertakes with the Lender to comply with the following
provisions of this Clause 13 at all times during the Security Period except as the Lender may
otherwise permit in writing.
	 
	13.2	 	Ship’s name and registration. The Borrower shall keep the Ship registered in its name under
the laws and flag of Liberia; shall not do or allow to be done anything as a result of which
such registration might be cancelled or imperilled; and shall not change the name or port of
registry of the Ship.

27

 

	13.3	 	Repair and classification. The Borrower shall keep the 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 the Ship with the highest class available for vessel of the same type, age
and characteristics as the Ship with a classification society, approved by the Lender, which
is a member of IACS, free of outstanding or overdue recommendations and conditions of such
classification society affecting the Ship’s class (other than outstanding recommendations and
conditions notified to the Lender in writing prior to the date of this Agreement); and
	 
	(c)	 	so as to comply with all laws and regulations applicable to vessels registered at ports in
Liberia or to vessels trading to any jurisdiction to which the Ship may trade from time to
time including but not limited to the ISM Code, the ISPS Code and the ISM Code Documentation.
	 
	13.4	 	Classification society undertaking. The Borrower shall instruct the classification society
referred to in Clause 13.3 (and procure that the classification society undertakes with the
Lender):
	 
	(a)	 	to send to the Lender, following receipt of a written request from the Lender, certified true
copies of all original class records held by the classification society in relation to the
Ship;
	 
	(b)	 	to allow the Lender (or its agents), at any time and from time to time, to inspect the
original class and related records of the Borrower and the Ship at the offices of the
classification society and to take copies of them;
	 
	(c)	 	to notify the Lender immediately in writing if the classification society:

	 	(i)	 	receives notification from the Borrower or any other person that the Ship’s
classification society is to be changed; or
	 
	 	(ii)	 	becomes aware of any facts or matters which may result in or have resulted in a
change, suspension, discontinuance, withdrawal or expiry of the Ship’s class under the
rules or terms and conditions of the Borrower’s or the Ship’s membership of the
classification society;

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

	 	(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 Lender in reasonable
detail the facts and circumstances of such default, the consequences of such default,
and any remedy period agreed or allowed by the classification society.

	13.5	 	Modification. The Borrower shall not make any modification or repairs to, or replacement of,
the Ship or equipment installed on the Ship which would or might materially alter the
structure, type or performance characteristics of the Ship or materially reduce its value.

	13.6	 	Removal of parts. The Borrower shall not remove any material part of the Ship, or any item
of equipment installed on the Ship, unless the part or item so removed is forthwith

28

 

	 	 	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 Lender and becomes on installation on the Ship the property of the
Borrower and subject to the security constituted by the Mortgage Provided that the Borrower
may install equipment owned by a third party if the equipment can be removed without any
risk of damage to the Ship.
	 
	13.7	 	Surveys. The Borrower shall submit the Ship regularly to all periodical or other surveys
which may be required for classification purposes and, if so required by the Lender, provide
the Lender with copies of all survey reports and shall allow the Lender’s representatives to
conduct a comprehensive inspection of the Ship’s records when and if required by the Lender.
	 
	13.8	 	Inspection. The Borrower shall permit the Lender (by surveyors or other persons appointed by
it for that purpose) to board the Ship at all reasonable times (during the pre-delivery and
post-delivery period) to inspect its condition or to satisfy themselves about proposed or
executed repairs and shall afford all proper facilities for such inspections, and all costs
and expenses in relation thereto shall be for the account of the Borrower.
	 
	13.9	 	Prevention of and release from arrest. The Borrower shall promptly discharge:
	 
	(a)	 	all liabilities which give or may give rise to maritime or possessory liens on or claims
enforceable against the Ship, the Earnings or the Insurances;
	 
	(b)	 	all taxes, dues and other amounts charged in respect of the Ship, the Earnings or the
Insurances; and
	 
	(c)	 	all other outgoings whatsoever in respect of the Ship, the Earnings or the Insurances,
	 
	 	 	and, forthwith upon receiving notice of the arrest of the Ship, or of its detention in
exercise or purported exercise of any lien or claim, the Borrower shall procure its release
by providing bail or otherwise as the circumstances may require.
	 
	13.10	 	Compliance with laws etc. The 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, its ownership, operation and management or
to the business of the Borrower and the Approved Manager;
	 
	(b)	 	not employ the Ship nor allow its employment in any manner contrary to any law or regulation
in any relevant jurisdiction including but not limited to the ISM Code and the ISPS Code; and
	 
	(c)	 	in the event of hostilities in any part of the world (whether war is declared or not), not
cause or permit its to enter or trade to any zone which is declared a war zone by any
government or by the Ship’s war risks insurers unless the prior written consent of the Lender
has been given and the Borrower has (at its expense) effected any special, additional or
modified insurance cover which the Lender may require.
	 
	13.11	 	Provision of information. The Borrower shall promptly provide the Lender with any
information which it requests regarding:
	 
	(a)	 	the Ship, its employment, position and engagements;
	 
	(b)	 	the Earnings and payments and amounts due to the Ship’s master and crew;
	 
	(c)	 	any expenses incurred, or likely to be incurred, in connection with the operation,
maintenance or repair of the Ship and any payments made in respect of the Ship;

29

 

	(d)	 	any towages and salvages;
	 
	(e)	 	the Borrower’s, the Approved Manager’s or the Ship’s compliance with the ISM Code and the
ISPS Code;
	 
	 	 	and, upon the Lender’s request, provide copies of any current charter relating to the Ship,
of any current charter guarantee and of the Document of Compliance, Safety Management
Certificate and International Ship Security Certificate of the Ship.
	 
	13.12	 	Notification of certain events. The Borrower shall immediately notify the Lender by fax,
confirmed forthwith by letter, of:
	 
	(a)	 	any casualty which is or is likely to be or to become a Major Casualty;
	 
	(b)	 	any occurrence as a result of which the Ship has become or is, by the passing of time or
otherwise, likely to become a Total Loss;
	 
	(c)	 	any requirement or recommendation made by any insurer or classification society or by any
competent authority which is not immediately complied with;
	 
	(d)	 	any arrest or detention of the Ship, any exercise or purported exercise of any lien on the
Ship or its Earnings or any requisition of the Ship for hire;
	 
	(e)	 	any intended dry docking of the Ship;
	 
	(f)	 	any Environmental Claim made against the Borrower or in connection with the Ship, or any
Environmental Incident;
	 
	(g)	 	any claim for breach of the ISM Code or the ISPS Code being made against the Borrower, the
Approved Manager or otherwise in connection with the Ship;
	 
	(h)	 	any other matter, event or incident, actual or threatened, the effect of which will or could
lead to the ISM Code or the ISPS Code not being complied with,
	 
	 	 	and the Borrower shall keep the Lender advised in writing on a regular basis and in such
detail as the Lender shall require of the Borrower’s, the Approved Manager’s or any other
person’s response to any of those events or matters.
	 
	13.13	 	Restrictions on chartering, appointment of managers etc. The Borrower shall not:
	 
	(a)	 	let the Ship on demise charter for any period;
	 
	(b)	 	enter into any time or consecutive voyage charter, other than an Approved Charter, in respect
of the 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 the Ship under which more than 2 months’ hire (or the
equivalent) is payable in advance;
	 
	(d)	 	charter the Ship otherwise than on bona fide arm’s length terms at the time when the Ship is
fixed;
	 
	(e)	 	appoint a manager of the Ship other than the Approved Manager or agree to any alteration to
the terms of the Approved Manager’s appointment;
	 
	(f)	 	de-activate or lay up the Ship; or

30

 

	(g)	 	put the Ship into the possession of any person for the purpose of work being done upon her in
an amount exceeding or likely to exceed $250,000 (or the equivalent in any other currency)
unless that person has first given to the Lender and in terms satisfactory to it a written
undertaking not to exercise any lien on the Ship or the Earnings for the cost of such work or
for any other reason.
	 
	13.14	 	Notice of Mortgage. The Borrower shall keep the Mortgage registered against the Ship as a
valid first priority mortgage, carry on board the Ship a certified copy of the Mortgage and
place and maintain in a conspicuous place in the navigation room and the Master’s cabin of the
Ship a framed printed notice stating that the Ship is mortgaged by the Borrower to the Lender.
	 
	13.15	 	Sharing of Earnings. The Borrower shall not:
	 
	(a)	 	enter into any agreement or arrangement for the sharing of any Earnings;
	 
	(b)	 	enter into any agreement or arrangement for the postponement of any date on which any
Earnings are due; the reduction of the amount of any Earnings or otherwise for the release or
adverse alteration of any right of the Borrower to any Earnings; or
	 
	(c)	 	enter into any agreement or arrangement for the release of, or adverse alteration to, any
guarantee or Security Interest relating to any Earnings.
	 
	13.16	 	Charterparty Assignment. If the Borrower enters into any Approved Charter, the Borrower
shall at the request of the Lender execute in favour of the Lender (and register, if
applicable) a Charterparty Assignment in respect of such Approved Charter, and shall deliver
to the Lender any documents in relation thereto which the Lender may require.
	 
	14	 	SECURITY COVER
	 
	14.1	 	Required security cover. The Borrower hereby undertakes that if, and so often as, the
aggregate of:
	 
	(a)	 	the Market Value of the Ship; and
	 
	(b)	 	the net realisable value of any additional security for the time being actually provided to
the Lender pursuant to this Clause 14,
	 
	 	 	is less than the amount equal to the Relevant Percentage of the Loan it will within 1 month
after the date on which the Lender’s notice is served, either:

	 	(i)	 	provide, or ensure that a third party provides, additional security which, in
the opinion of the Lender, has a net realisable value at least equal to the shortfall
and is documented in such terms as the Lender may approve or require; or
	 
	 	(ii)	 	prepay such part (at least) of the Loan as will eliminate the shortfall,

	 	 	where “Relevant Percentage” means:

	 	(A)	 	in relation to the period commencing on the Drawdown Date and ending on 31
December 2012, 100 per cent.; and
	 
	 	(B)	 	at all times thereafter, 125 per cent.

	14.2	 	Meaning of additional security. In Clause 14.1 “security” means a Security Interest over an
asset or assets (whether securing the Borrower’s 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 Borrower’s liabilities under the Finance Documents.

31

 

	14.3	 	Requirement for additional documents. The Borrower shall not be deemed to have complied with
Clause 14.1(i) above until the Lender has received in connection with the additional security
certified copies of documents referred to in paragraphs 3, 4 and 5 of Schedule 1 below and
such legal opinions in terms acceptable to the Lender from such lawyers as they may select.
	 
	14.4	 	Valuation of Ship. The Market Value of the Ship at any date is that shown by the average of
two valuations prepared:
	 
	(a)	 	as at a date not more than 14 days previously;
	 
	(b)	 	with or without physical inspection of the Ship (as the Lender may require);
	 
	(c)	 	by two Approved Brokers approved by the Lender;
	 
	(d)	 	on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms
as between a willing seller and a willing buyer on a charter free basis;
	 
	(e)	 	after deducting the estimated amount of the usual and reasonable expenses which would be
incurred in connection with the sale.
	 
	14.5	 	Value of additional security. The net realisable value of any additional security which is
provided under Clause 14.1 and which consists of a Security Interest over a vessel shall be
that shown by a valuation complying with the requirements of Clause 14.4.
	 
	14.6	 	Valuations binding. Any valuation under Clause 14.1(i), 14.4 or 14.5 shall be binding and
conclusive as regards the Borrower and the Ship, as shall be any valuation which the Lender
makes of a security which does not consist of or include a Security Interest.
	 
	14.7	 	Frequency of valuations. The Borrower acknowledges and agrees that the Lender may commission
valuations of the Ship at such times as the Lender shall deem necessary and in any event not
less often than once during each 3-month period of the Security Period.
	 
	14.8	 	Provision of information. The Borrower shall promptly provide the Lender and any Approved
Broker acting under Clause 14.4 or 14.5 with any information which the Lender or the
Shipbroker or expert may request for the purposes of the valuation; and, if the Borrower fails
to provide the information by the date specified in the request, the valuation may be made on
any basis and assumptions which the shipbroker or the Lender (or the expert appointed by them)
consider prudent.
	 
	14.9	 	Payment of valuation expenses. Without prejudice to the generality of the Borrower’s
obligations under Clauses 19.2, 19.3 and 20.3, the Borrower shall, on demand, pay the Lender
the amount of the fees and expenses of any shipbroker or expert instructed by the Lender under
this Clause and all legal and other expenses incurred by the Lender in connection with any
matter arising out of this Clause Provided that (i) so long as no Event of Default shall have
occurred and (ii) all valuations of the Ship commissioned by the Lender for the purposes of
this Clause 14 confirm that the Borrower has satisfied the test in Clause 14.1, the Borrower
shall not be obliged to pay any such fees and expenses in respect of more than 2 valuations of
the Ship in any 3-month period.
	 
	15	 	PAYMENTS AND CALCULATIONS
	 
	15.1	 	Currency and method of payments. All payments to be made by the Borrower to the Lender under
a Finance Document shall be made to the Lender:
	 
	(a)	 	by not later than 11.00 a.m. (Athens time) on the due date;

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	(b)	 	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 Lender shall
specify as being customary at the time for the settlement of international transactions of the
type contemplated by this Agreement); and
	 
	(c)	 	to the account of the Lender with JP Morgan Chase New York, CHASUS33 A/C WestLB AG, London
WELAGB2L (Account No 001-1-352267 under reference “Newlead Victoria Ltd.), or to such other
account with such other bank as the Lender may from time to time notify to the Borrower.
	 
	15.2	 	Payment on non-Business Day. If any payment by the Borrower under a Finance Document would
otherwise fall due on a day which is not a Business Day:
	 
	(a)	 	the due date shall be extended to the next succeeding Business Day; or
	 
	(b)	 	if the next succeeding Business Day falls in the next calendar month, the due date shall be
brought forward to the immediately preceding Business Day;
	 
	 	 	and interest shall be payable during any extension under paragraph (a) at the rate payable
on the original due date.
	 
	15.3	 	Basis for calculation of periodic payments. All interest 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.
	 
	15.4	 	Lender accounts. The Lender shall maintain an account or accounts showing the amounts
advanced by the Lender and all other sums owing to the Lender from the Borrower and each
Security Party under the Finance Documents and all payments in respect of those amounts made
by the Borrower and any other Security Party.
	 
	15.5	 	Accounts prima facie evidence. If the account maintained under Clauses 15.4 shows an amount
to be owing by the Borrower or a Security Party to the Lender, that account shall be prima
facie evidence that that amount is owing to the Lender.
	 
	16	 	APPLICATION OF RECEIPTS
	 
	16.1	 	Normal order of application. Except as any Finance Document may otherwise provide, any sums
which are received or recovered by the Lender 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 (or any of them) in such order of application and/or such proportions as the Lender
may specify by notice to the Borrower and the Security Parties;
	 
	(b)	 	SECONDLY: in retention of an amount equal to any amount not then due and payable under any
Finance Document but which the Lender, by notice to the Borrower and the Security Parties,
states in its opinion will or may become due and payable in the future and, upon those amounts
becoming due and payable, in or towards satisfaction of them in accordance with the provisions
of this Clause; and
	 
	(c)	 	THIRDLY: any surplus shall be paid to the Borrower or to any other person appearing to be
entitled to it.
	 
	16.2	 	Variation of order of application. The Lender may, by notice to the Borrower and the
Security Parties, provide for a different manner of application from that set out in Clause
16.1 either as regards a specified sum or sums or as regards sums in a specified category or
categories.

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	16.3	 	Notice of variation of order of application. The Lender may give notices under Clause 16.2
from time to time; and such a notice may be stated to apply not only to sums which may be
received or recovered in the future, but also to any sum which has been received or recovered
on or after the third Business Day before the date on which the notice is served.
	 
	16.4	 	Appropriation rights overridden. This Clause 16 and any notice which the Lender gives under
Clause 16.2 shall override any right of appropriation possessed, and any appropriation made,
by the Borrower or any other Security Party.
	 
	17	 	APPLICATION OF EARNINGS
	 
	17.1	 	Payment of Earnings. The Borrower undertakes with the Lender to ensure that, throughout the
Security Period (subject only to the provisions of the relevant General Assignment), all the
Earnings of the Ship are paid to the Earnings Account.
	 
	17.2	 	Location of accounts. The Borrower shall promptly:
	 
	(a)	 	comply with any requirement of the Lender as to the location or re-location of the Earnings
Account and the Holding Account (or either of them); and
	 
	(b)	 	execute any documents which the Lender specifies to create or maintain in favour of the
Lender a Security Interest over (and/or rights of set-off, consolidation or other rights in
relation to) the Earnings Account and the Holding Account.
	 
	17.3	 	Debits for expenses etc. The Lender shall be entitled (but not obliged) from time to time to
debit the Earnings Account without prior notice in order to discharge any amount due and
payable under Clause 19 or 20 to the Lender or payment of which the Lender has become entitled
to demand under Clause 19 or 20.
	 
	17.4	 	Borrower’s obligations unaffected. The provisions of this Clause 17 (as distinct from a
distribution effected under Clause 17.4) do not affect:
	 
	(a)	 	the liability of the Borrower to make payments of principal and interest on the due dates; or
	 
	(b)	 	any other liability or obligation of the Borrower or any other Security Party under any
Finance Document.
	 
	18	 	EVENTS OF DEFAULT
	 
	18.1	 	Events of Default. An Event of Default occurs if:
	 
	(a)	 	the Borrower or any other Security Party fails to pay when due or (if so payable) on demand
within 3 Business Days of such demand and any sum payable under a Finance Document or under
any document relating to a Finance Document; or
	 
	(b)	 	any breach occurs of Clause 8.2, 10.2, 10.3, 10.15, 10.16, 10.19, 11.2, 11.3, 11.4 or 14.1 or
Clause 11.15 (financial covenants) of the Corporate Guarantee; or
	 
	(c)	 	any breach by the Borrower or any other Security Party occurs of any provision of a Finance
Document (other than a breach covered by paragraphs (a) or (b) above) if, in the opinion of
the Lender, such default is capable of remedy, and such default continues unremedied 30 days
after written notice from the Lender requesting action to remedy the same; or
	 
	(d)	 	any breach by the Borrower or any other Security Party occurs of any provision of a Finance
Document (other than a breach covered by paragraphs (a), (b) or (c) above); or

34

 

	(e)	 	any representation, warranty or statement made by, or by an officer of, the Borrower or a
Security Party in a Finance Document or any other notice or document relating to a Finance
Document is untrue or misleading when it is made; or
	 
	(f)	 	any of the following occurs in relation to any Financial Indebtedness of a Relevant Person
(in the case of the Corporate Guarantor, exceeding $1,000,000 (or the equivalent in any other
currency) in aggregate):

	 	(i)	 	any Financial Indebtedness of a Relevant Person is not paid when due or, if so
payable, on demand; or
	 
	 	(ii)	 	any Financial Indebtedness of a Relevant Person becomes due and payable or
capable of being declared due and payable prior to its stated maturity date as a
consequence of any event of default; or
	 
	 	(iii)	 	a lease, hire purchase agreement or charter creating any Financial
Indebtedness of a Relevant Person is terminated by the lessor or owner or becomes
capable of being terminated as a consequence of any termination event; or
	 
	 	(iv)	 	any overdraft, loan, note issuance, acceptance credit, letter of credit,
guarantee, foreign exchange or other facility, or any swap or other derivative contract
or transaction, relating to any Financial Indebtedness of a Relevant Person ceases to
be available or becomes capable of being terminated as a result of any event of
default, or cash cover is required, or becomes capable of being required, in respect of
such a facility as a result of any event of default; or
	 
	 	(v)	 	any Security Interest securing any Financial Indebtedness of a Relevant Person
becomes enforceable; or

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

	 	(i)	 	a Relevant Person becomes, in the opinion of the Lender, unable to pay its
debts as they fall due; or
	 
	 	(ii)	 	any assets of a Relevant Person are subject to any form of execution,
attachment, arrest, sequestration or distress or any form of freezing order; or
	 
	 	(iii)	 	any administrative or other receiver is appointed over any asset of a Relevant
Person; or
	 
	 	(iv)	 	a Relevant Person makes any formal declaration of bankruptcy or any formal
statement to the effect that it is insolvent or likely to become insolvent, or a
winding up or administration order is made in relation to a Relevant Person, or the
members or directors of a Relevant Person pass a resolution to the effect that it
should be wound up, placed in administration or cease to carry on business, save that
this paragraph does not apply to a fully solvent winding up of a Relevant Person other
than the Borrower or the Corporate Guarantor which is, or is to be, effected for the
purposes of an amalgamation or reconstruction previously approved by the Lender and
effected not later than 3 months after the commencement of the winding up; or
	 
	 	(v)	 	a petition is presented in any Pertinent Jurisdiction for the winding up or
administration, or the appointment of a provisional liquidator, of a Relevant Person
unless the petition is being contested in good faith and on substantial grounds and is
dismissed or withdrawn within 30 days of the presentation of the petition; or

35

 

	 	(vi)	 	a Relevant Person petitions a court, or presents any proposal for, any form of
judicial or non-judicial suspension or deferral of payments, reorganisation of its debt
(or certain of its debt) or arrangement with all or a substantial proportion (by number
or value) of its creditors or of any class of them or any such suspension or deferral
of payments, reorganisation or arrangement is effected by court order, contract or
otherwise; or
	 
	 	(vii)	 	any meeting of the members or directors of a Relevant Person is summoned for
the purpose of considering a resolution or proposal to authorise or take any action of
a type described in paragraphs (iii), (iv), (v) or (vi) above; or
	 
	 	(viii)	 	in a Pertinent Jurisdiction other than England, any event occurs or any procedure is
commenced which, in the opinion of the Lender, is similar to any of the foregoing; or

	(h)	 	the Borrower ceases or suspends carrying on its business or a part of its business which, in
the opinion of the Lender, is material in the context of this Agreement; or
	 
	(i)	 	it becomes unlawful in any Pertinent Jurisdiction or impossible:

	 	(i)	 	for the Borrower or any other Security Party to discharge any liability under a
Finance Document or to comply with any other obligation which the Lender considers
material under a Finance Document; or
	 
	 	(ii)	 	for the Lender to exercise or enforce any right under, or to enforce any
Security Interest created by, a Finance Document; or

	(j)	 	any official consent necessary to enable the Borrower to own, operate or charter the Ship or
to enable the Borrower or any other Security Party to comply with any provision which the
Lender considers 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 Lender that, without its prior consent, a change has occurred or probably
has occurred after the date of this Agreement (other than pursuant to Clause 10.19) in the
ownership of any of the shares in the Borrower or any other Security Party or in the ultimate
control of the voting rights attaching to any of those shares; or
	 
	(l)	 	any provision which the Lender considers material of a Finance Document proves to have been
or becomes invalid or unenforceable, or a Security Interest created by a Finance Document
proves to have been or becomes invalid or unenforceable or such a Security Interest proves to
have ranked after, or loses its priority to, another Security Interest or any other third
party claim or interest; or
	 
	(m)	 	the security constituted by a Finance Document is in any way imperilled or in jeopardy; or
	 
	(n)	 	any other event occurs or any other circumstances arise or develop including, without
limitation:

	 	(i)	 	a change in the financial position, state of affairs or prospects of the
Borrower, the Corporate Guarantor or the Group; or
	 
	 	(ii)	 	any accident or other event involving the Ship or another vessel owned,
chartered or operated by a Relevant Person

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	 	 	in the light of which the Lender considers that there is a significant risk that the
Borrower or any other Security Party is, or will later become, unable to discharge its
liabilities under the Finance Documents as they fall due.
	 
	18.2	 	Actions following an Event of Default. On, or at any time after, the occurrence of an Event
of Default:
	 
	(a)	 	the Lender may:

	 	(i)	 	serve on the Borrower a notice stating that the obligations of the Lender to
the Borrower under this Agreement are terminated; and/or
	 
	 	(ii)	 	serve on the Borrower a notice stating that the Loan, all accrued interest and
all other amounts accrued or owing under this Agreement are immediately due and payable
or are due and payable on demand; and/or
	 
	 	(iii)	 	take any other action which, as a result of the Event of Default or any notice
served under paragraph (i) or (ii) above, the Lender is entitled to take under any
Finance Document or any applicable law; and/or

	(b)	 	the Lender may take any action which, as a result of the Event of Default or any notice
served under paragraph (a) (i) or (ii) above, the Lender is entitled to take under any Finance
Document or any applicable law.
	 
	18.3	 	Termination of obligations. On the service of a notice under Clause 18.2(a), all the
obligations of the Lender to the Borrower under this Agreement shall terminate.
	 
	18.4	 	Acceleration of Loan. On the service of a notice under Clause 18.2(b), the Loan, all accrued
interest and all other amounts accrued or owing from the Borrower or any other 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.
	 
	18.5	 	Multiple notices; action without notice. The Lender may serve notices under Clause 18.2 (a)
and (b) simultaneously or on different dates and it may take any action referred to in Clause
18.2 if no such notice is served or simultaneously with or at any time after the service of
both or either of such notices.
	 
	18.6	 	Exclusion of Lender liability. Neither the Lender nor any receiver or manager appointed by
the Lender, shall have any liability to the Borrower or a Security Party:
	 
	(a)	 	for any loss caused by an exercise of rights under, or enforcement of a Security Interest
created by, a Finance Document or by any failure or delay to exercise such a right or to
enforce such a Security Interest; or
	 
	(b)	 	as mortgagee in possession or otherwise, for any income or principal amount which might have
been produced by or realised from any asset comprised in such a Security Interest or for any
reduction (however caused) in the value of such an asset;
	 
	 	 	except that this does not exempt the Lender or a receiver or manager from liability for
losses shown to have been caused directly and mainly by the dishonesty or the wilful
misconduct of the Lender’s own officers and employees or (as the case may be) such
receiver’s or manager’s own partners or employees.
	 
	18.7	 	Interpretation. In Clause 18.1(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 18.1(g) “petition” includes
an application.

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	19	 	FEES AND EXPENSES
	 
	19.1	 	Restructuring fee. The Borrower shall pay to the Lender a non-refundable restructuring fee
of $225,000 as follows:
	 
	(a)	 	$112,500 which has been paid, on 26 April 2010 and
	 
	(b)	 	$112,500 which shall be payable on 30 September 2010.
	 
	19.2	 	Costs of negotiation, preparation etc. The Borrower shall pay to the Lender on its demand
the amount of all expenses incurred by the Lender 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.
	 
	19.3	 	Costs of variation, amendments, enforcement etc. The Borrower shall pay to the Lender, on
the Lender’s demand, the amount of all expenses incurred by the Lender in connection with:
	 
	(a)	 	any amendment or supplement to a Finance Document, or any proposal for such an amendment to
be made;
	 
	(b)	 	any consent or waiver by the Lender under or in connection with a Finance Document, or any
request for such a consent or waiver;
	 
	(c)	 	the valuation of any security provided or offered under Clause 14 or any other matter
relating to such security;
	 
	(d)	 	the opinions of the independent insurance consultant referred to in paragraph 15 of Schedule
1; or
	 
	(e)	 	any step taken by the Lender with a view to the protection, exercise or enforcement of any
right or Security Interest created by a Finance Document or for any similar purpose.
	 
	 	 	There shall be recoverable under paragraph (e) the full amount of all legal expenses,
whether or not such as would be allowed under rules of court or any taxation or other
procedure carried out under such rules.
	 
	19.4	 	Documentary taxes. The Borrower shall promptly pay any tax payable on or by reference to any
Finance Document, and shall, on the Lender’s demand, fully indemnify the Lender against any
claims, expenses, liabilities and losses resulting from any failure or delay by the Borrower
to pay such a tax.
	 
	19.5	 	Certification of amounts. A notice which is signed by an authorised officer of the Lender,
which states that a specified amount, or aggregate amount, is due to that Lender under this
Clause 19 and which indicates (without necessarily specifying a detailed breakdown) the
matters in respect of which the amount, or aggregate amount, is due shall be prima facie
evidence that the amount, or aggregate amount, is due.
	 
	20	 	INDEMNITIES
	 
	20.1	 	Indemnities regarding borrowing and repayment of Loan. The Borrower shall fully indemnify
the Lender on its demand in respect of all claims, expenses, liabilities and losses which are
made or brought against or incurred by the Lender, or which the Lender reasonably and with due
diligence estimates that it will incur, as a result of or in connection with:

38

 

	(a)	 	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;
	 
	(b)	 	any failure (for whatever reason) by the Borrower to make payment of any amount due under a
Finance Document on the due date or, if so payable, on demand (after giving credit for any
default interest paid by the Borrower on the amount concerned under Clause 6; and
	 
	(c)	 	the occurrence and/or continuance of an Event of Default and/or the acceleration of repayment
of the Loan under Clause 18,
	 
	 	 	and in respect of any tax (other than tax on its overall net income) for which the Lender is
liable in connection with any amount paid or payable to the Lender (whether for its own
account or otherwise) under any Finance Document.
	 
	20.2	 	Breakage costs. Without limiting its generality, Clause 20.1 covers any claim, expense,
liability or loss, including a loss of a prospective profit, incurred by the Lender:
	 
	(a)	 	in liquidating or employing deposits from third parties acquired or arranged to fund or
maintain all or any part of the Loan and/or any overdue amount (or an aggregate amount which
includes the Loan or any overdue amount); and
	 
	(b)	 	in terminating, or otherwise in connection with, any interest and/or currency swap or any
other transaction entered into (whether with another legal entity or with another office or
department of the Lender) to hedge any exposure arising under this Agreement or a number of
transactions of which this Agreement is one.
	 
	20.3	 	Miscellaneous indemnities. The Borrower shall fully indemnify the Lender on its 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 Lender 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 Lender or by any receiver appointed under a Finance Document;
	 
	(b)	 	any other event, matter or question which occurs or arises at any time during the Security
Period and which has any connection with, or any bearing on, any Finance Document, any payment
or other transaction relating to a Finance Document or any asset covered (or previously
covered) by a Security Interest created (or intended to be created) by a Finance Document,
	 
		 	other than liability items which are shown to have been caused by the gross negligence or
the wilful misconduct of the Lender’s or (as the case may be) the Lender’s own officers or
employees.
	 
	 	 	Without prejudice to its generality, this Clause 20.3 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.
	 
	20.4	 	Currency indemnity. If any sum due from the Borrower or any other Security Party to the
Lender under a Finance Document or under any order or judgment relating to a Finance Document
has to be converted from the currency in which the Finance Document provided for the sum to be
paid (the “Contractual Currency”) into another currency (the “Payment Currency”) for the
purpose of:
	 
	(a)	 	making or lodging any claim or proof against the Borrower or any other Security Party,
whether in its liquidation, any arrangement involving it or otherwise; or

39

 

	(b)	 	obtaining an order or judgment from any court or other tribunal; or
	 
	(c)	 	enforcing any such order or judgment,
	 
	 	 	the Borrower shall indemnify the Lender against the loss arising when the amount of the
payment actually received by the Lender is converted at the available rate of exchange into
the Contractual Currency.
	 
	 	 	In this Clause 20.4, the “available rate of exchange” means the rate at which the Lender 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 20.4 creates a separate liability of the Borrower which is distinct from its
other liabilities under the Finance Documents and which shall not be merged in any judgment
or order relating to those other liabilities.
	 
	20.5	 	Certification of amounts. A notice which is signed by two authorised officers of the Lender,
which states that a specified amount, or aggregate amount, is due to the Lender under this
Clause 20 and which indicates (without necessarily specifying a detailed breakdown) the
matters in respect of which the amount, or aggregate amount, is due shall be prima facie
evidence that the amount, or aggregate amount, is due.
	 
	21	 	NO SET-OFF OR TAX DEDUCTION
	 
	21.1	 	No deductions. All amounts due from the Borrower under a Finance Document shall be paid:
	 
	(a)	 	without any form of set-off, cross-claim or condition; and
	 
	(b)	 	free and clear of any tax deduction except a tax deduction which the Borrower is required by
law to make.
	 
	21.2	 	Grossing-up for taxes. If the Borrower is required by law to make a tax deduction from any
payment:
	 
	(a)	 	the Borrower shall notify the Lender as soon as it becomes aware of the requirement;
	 
	(b)	 	the Borrower shall pay the tax deducted to the appropriate taxation authority promptly, and
in any event before any fine or penalty arises;
	 
	(c)	 	the amount due in respect of the payment shall be increased by the amount necessary to ensure
that the Lender 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.
	 
	21.3	 	Evidence of payment of taxes. Within one month after making any tax deduction, the Borrower
shall deliver to the Lender documentary evidence satisfactory to the Lender that the tax had
been paid to the appropriate taxation authority.
	 
	21.4	 	Exclusion of tax on overall net income. In this Clause 21 “tax deduction” means any
deduction or withholding for or on account of any present or future tax except tax on the
Lender’s overall net income.
	 
	22	 	ILLEGALITY, ETC
	 
	22.1	 	Illegality. This Clause 22 applies if the Lender notifies the Borrower that it has become,
or will with effect from a specified date, become:

40

 

	(a)	 	unlawful or prohibited as a result of the introduction of a new law, an amendment to an
existing law or a change in the manner in which an existing law is or will be interpreted or
applied; or
	 
	(b)	 	contrary to, or inconsistent with, any regulation,
	 
	 	 	for the Lender to maintain or give effect to any of its obligations under this Agreement in
the manner contemplated by this Agreement or any of the other Finance Documents.
	 
	22.2	 	Notification and effect of illegality. On the Lender notifying the Borrower under Clause
22.1, the Lender’s obligation to make the Loan available to the Borrower shall terminate; and
thereupon or, if later, on the date specified in the Lender’s notice under Clause 22.1 as the
date on which the notified event would become effective the Borrower shall prepay the Loan in
full in accordance with Clause 7.
	 
	22.3	 	Mitigation. If circumstances arise which would result in a notification under Clause 22.1
then, without in any way limiting the rights of the Lender under Clause 22.3, the Lender shall
use reasonable endeavours to transfer its obligations, liabilities and rights under this
Agreement and the other Finance Documents to another office or financial institution not
affected by the circumstances but the 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.
	 
	23	 	INCREASED COSTS
	 
	23.1	 	Increased costs. This Clause 23 applies if the Lender notifies the Borrower that it
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
	 
	(b)	 	the effect of complying with any regulation (including any which relates to capital adequacy
or liquidity controls or which affects the manner in which the 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,
	 
	 	 	is that the 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 Lender having entered into, or being a party to, this Agreement of funding or
maintaining the Loan or performing its obligations under this Agreement, or of having
outstanding all or any part of the Loan or other unpaid sums; or
	 
	 	(ii)	 	a reduction in the amount of any payment to the Lender under this Agreement or
in the effective return which such a payment represents to the Lender or on its
capital;

41

 

	 	(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 Loan or (as
the case may require) the proportion of that cost attributable to the Loan; 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 Lender under this Agreement,

	 	 	but not an item attributable to a change in the rate of tax on the overall net income of the
Lender (or a parent company of it) or an item covered by the indemnity for tax in Clause
20.1 or by Clause 21.
	 
	 	 	For the purposes of this Clause 23.1 the 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.
	 
	23.2	 	Payment of increased costs. The Borrower shall pay to the Lender, on the Lender’s demand,
for the account of the Lender the amounts which the Lender from time to time notifies the
Borrower that it has specified to be necessary to compensate the Lender for the increased
cost.
	 
	23.3	 	Notice of prepayment. If the Borrower is not willing to continue to compensate the Lender
for the increased cost under Clause 23.2, the Borrower may give the Lender not less than 14
days’ notice of their intention to prepay the Loan at the end of an Interest Period.
	 
	23.4	 	Prepayment. A notice under Clause 23.3 shall be irrevocable and on the date specified in its
notice of intended prepayment, the Borrower shall prepay (without premium or penalty) the
Loan, together with accrued interest thereon at the applicable rate plus the applicable Margin
and the Mandatory Cost (if any).
	 
	23.5	 	Application of prepayment. Clause 7 shall apply in relation to the prepayment.
	 
	24	 	SET-OFF
	 
	24.1	 	Application of credit balances. The Lender may without prior notice:
	 
	(a)	 	apply any balance (whether or not then due) which at any time stands to the credit of any
account in the name of the Borrower at any office in any country of the Lender in or towards
satisfaction of any sum then due from the Borrower to the Lender under any of the Finance
Documents; and
	 
	(b)	 	for that purpose:

	 	(i)	 	break, or alter the maturity of, all or any part of a deposit of the Borrower;
	 
	 	(ii)	 	convert or translate all or any part of a deposit or other credit balance into
Dollars;
	 
	 	(iii)	 	enter into any other transaction or make any entry with regard to the credit
balance which the Lender considers appropriate.

	24.2	 	Existing rights unaffected. The Lender shall not be obliged to exercise any of its rights
under Clause 24.1; 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 the Lender is
entitled (whether under the general law or any document).

42

 

	24.3	 	No Security Interest. This Clause 24 gives the Lender a contractual right of set-off only,
and does not create any equitable charge or other Security Interest over any credit balance of
the Borrower.
	 
	25	 	TRANSFERS AND CHANGES IN LENDING OFFICES
	 
	25.1	 	Transfer by Borrower. The Borrower may not transfer, novate or assign any of its rights,
liabilities or obligations under any Finance Document.
	 
	25.2	 	Assignment by Lender. The Lender may assign or transfer (at the Lender’s cost) all or any of
the rights and interests which it has under or by virtue of the Finance Documents by giving
notice to the Borrower.
	 
	25.3	 	Rights of assignee. 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, a direct or indirect assignee of any of the Lender’s rights or interests
under or by virtue of the Finance Documents shall be entitled to recover damages by reference
to the loss incurred by that assignee or, as the case may be, transferee as a result of the
breach or misrepresentation irrespective of whether the Lender would have incurred a loss of
that kind or amount.
	 
	25.4	 	Sub-participation; subrogation assignment. The 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 the Borrower and the Lender may assign, in any manner and terms agreed by it, all
or any part of those rights to an insurer or surety who has become subrogated to them.
	 
	25.5	 	Disclosure of information. The Lender may disclose to a potential assignee or
sub-participant any information which the Lender has received in relation to the Borrower, any
other Security Party or their affairs under or in connection with any Finance Document, unless
the information is clearly of a confidential nature.
	 
	25.6	 	Change of lending office. The Lender may change its lending office by giving notice to the
Borrower and the change shall become effective on the later of:
	 
	(a)	 	the date on which the Borrower receives the notice; and
	 
	(b)	 	the date, if any, specified in the notice as the date on which the change will come into
effect.
	 
	26	 	VARIATIONS AND WAIVERS
	 
	26.1	 	Variations, waivers etc. by Lender. A document shall be effective to vary, waive, suspend or
limit any provision of a Finance Document, or the Lender’s rights or remedies under such a
provision or the general law, only if the document is signed, or specifically agreed to by fax
or telex, by the Borrower and the Lender and, if the document relates to a Finance Document to
which a Security Party is party, by that Security Party.
	 
	26.2	 	Exclusion of other or implied variations. Except for a document which satisfies the
requirements of Clause 26.1, no document, and no act, course of conduct, failure or neglect to
act, delay or acquiescence on the part of the Lender (or any person acting on its behalf)
shall result in the Lender (or any person acting on its behalf) 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 or any other Finance Document; or
	 
	(b)	 	an Event of Default; or

43

 

	(c)	 	a breach by the Borrower or a Security Party of an obligation under a Finance Document or the
general law; or
	 
	(d)	 	any right or remedy conferred by any Finance Document or by the general law;
	 
	 	 	and there shall not be implied into any Finance Document any term or condition requiring any
such provision to be enforced, or such right or remedy to be exercised, within a certain or
reasonable time
	 
	27	 	NOTICES
	 
	27.1	 	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.
	 
	27.2	 	Addresses for communications. A notice shall be sent:

	 	 	 	 	 

	(a)

	 	to the Borrower:
	 	c/o the Approved Manager
	 

	 	 	 	83, Akti Miaouli & Flessa Street
	 

	 	 	 	Piraeus 185 38
	 

	 	 	 	Greece
	 
	 	 	 	 
	 

	 	 	 	Fax No: +30 210 428 8501
	 
	 	 	 	 
	(b)

	 	to the Lender:
	 	Woolgate Exchange
	 

	 	 	 	25 Basinghall Street
	 

	 	 	 	London EC 2V 5HA
	 

	 	 	 	United Kingdom
	 
	 	 	 	 
	 

	 	 	 	Fax No: +44 207 020 8116
	 

	 	 	 	Attention: Shipping

		 	or to such other address as the relevant party may notify the Lender or, if the relevant
party is the Lender, the Borrower, the Lender and the Security Parties.
	 
	27.3	 	Effective date of notices. Subject to Clauses 27.4 and 27.5:
	 
	(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.
	 
	27.4	 	Service outside business hours. However, if under Clause 27.3 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 27.5) be deemed to be served, and shall take effect, at
9 a.m. on the next day which is such a business day.
	 
	27.5	 	Illegible notices. Clauses 27.4 and 27.5 do not apply if the recipient of a notice notifies
the sender within 1 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.

44

 

	27.6	 	Valid notices. A notice under or in connection with a Finance Document shall not be invalid
by reason that its contents or the manner of serving it do not comply with the requirements of
this Agreement or, where appropriate, any other Finance Document under which it is served if:
	 
	(a)	 	the failure to serve it in accordance with the requirements of this Agreement or other
Finance Document, as the case may be, has not caused any party to suffer any significant loss
or prejudice; or
	 
	(b)	 	in the case of incorrect and/or incomplete contents, it should have been reasonably clear to
the party on which the notice was served what the correct or missing particulars should have
been.
	 
	27.7	 	English language. Any notice under or in connection with a Finance Document shall be in
English.
	 
	27.8	 	Meaning of “notice”. In this Clause 27 “notice” includes any demand, consent, authorisation,
approval, instruction, waiver or other communication.
	 
	28	 	SUPPLEMENTAL
	 
	28.1	 	Rights cumulative, non-exclusive. The rights and remedies which the Finance Documents give
to the Lender 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.
	 
	28.2	 	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.
	 
	28.3	 	Counterparts. A Finance Document may be executed in any number of counterparts.
	 
	28.4	 	Third party rights. A person who is not a party to this Agreement has no right under the
Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of
this Agreement.
	 
	29	 	LAW AND JURISDICTION
	 
	29.1	 	English law. This Agreement and any non-contractual obligations arising out of or in
connection with it shall be governed by, and construed in accordance with, English law.
	 
	29.2	 	Exclusive English jurisdiction. Subject to Clause 29.3, the courts of England shall have
exclusive jurisdiction to settle any Dispute.
	 
	29.3	 	Choice of forum for the exclusive benefit of the Lender. Clause 29.2 is for the exclusive
benefit of the Lender, each of which reserves the right:
	 
	(a)	 	to commence proceedings in relation to any Dispute in the courts of any country other than
England and which have or claim jurisdiction to that Dispute; and

45

 

	(b)	 	to commence such proceedings in the courts of any such country or countries concurrently with
or in addition to proceedings in England or without commencing proceedings in England.
	 
	 	 	The Borrower shall not commence any proceedings in any country other than England in
relation to a Dispute.
	 
	29.4	 	Process Agent. The Borrower irrevocably appoints HFW Nominees Limited at its office for the
time being, presently at Friary Court, 65 Crutched Friars, London EC3N 2AE, 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 a Dispute.
	 
	29.5	 	Lender’s rights unaffected. Nothing in this Clause 29 shall exclude or limit any right which
the Lender 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.
	 
	29.6	 	Meaning of “proceedings”. In this Clause 29, “proceedings” means proceedings of any kind,
including an application for a provisional or protective measure and a “Dispute” means any
dispute arising out of or in connection with this Agreement (including a dispute relating to
the existence, validity or termination of this Agreement) or any non-contractual obligation
arising out of or in connection with this Agreement.

THIS AGREEMENT has been entered into on the date stated at the beginning of this Agreement.

46

 

EXECUTION PAGE

BORROWER

	 	 	 	 	 	 	 

	SIGNED by Panagiotis-Peter Kallifidas

	 	 	)	/s/Panagiotis-Peter Kallifidas
	 	 
	 

	 	 	 	 	 
	for and on behalf of

	 	 	)	 	 
	NEWLEAD VICTORIA LTD.

	 	 	)	 	 
	in the presence of: Katerina Naoum

	 	 	)	/s/Katerina Naoum	 	 
	 

	 	 	 	 	 

LENDER

	 	 	 	 	 	 	 

	SIGNED by

	 	 	)	 	 
	for and on behalf of

	 	 	)	 	 
	WESTLB AG, LONDON BRANCH

	 	 	)	 	 
	in the presence of: Katerina Naoum

	 	 	)	/s/Katerina Naoum
	 	 
	 

	 	 	 	 	 

47

 

SCHEDULE 1

CONDITION PRECEDENT DOCUMENTS

The following are the documents referred to in Clause 8.1(a).

	1	 	A duly executed original of this Agreement, the Second Deed of Novation, Amendment and
Restatement, the Corporate Guarantee, the Indemnity and Undertaking and the Accounts Pledge
(and of each document required to be delivered pursuant thereto).
	 
	2	 	Copies of the certificate of incorporation and constitutional documents of the Borrower and
each Security Party.
	 
	3	 	Copies of resolutions of the shareholders and directors of the Borrower and each Security
Party authorising the execution of each of the Finance Documents referred to at paragraph 1
above to which the Borrower and that Security Party is a party and, in the case of the
Borrower, 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
paragraph 1 above is executed on behalf of the Borrower and each Security Party.
	 
	5	 	Copies of all consents which the Borrower or any other Security Party requires to enter into,
or make any payment under, any Finance Document.
	 
	6	 	The originals of any mandates or other documents required in connection with the opening of
operation of each of the Earnings Account and the Holding Account and in relation to the
Lender’s “know your customer” regulations (whether in connection with the opening of the each
of the Earnings Account and the Holding Account or otherwise).
	 
	7	 	Evidence that the Borrower is a wholly-owned direct subsidiary of the Corporate Guarantor.
	 
	8	 	Documentary evidence that the agent for service of process named in Clause 29 has accepted
its appointment.
	 
	9	 	Favourable legal opinions from lawyers appointed by the Lender on such matters concerning the
laws of Liberia, the Republic of the Marshall Islands, Bermuda and such other relevant
jurisdictions as the Lender may require.
	 
	10	 	If the Lender so requires, in respect of any of the documents referred to above, a certified
English translation prepared by a translator approved by the Lender.
	 
	11	 	A duly executed original of each of the Mortgage, the General Assignment, the Charterparty
Assignment, the Indemnity and Undertaking and the Shares Pledge Option Agreement (and of each
document to be delivered pursuant to each of them).
	 
	12	 	Documentary evidence that:
	 
	(a)	 	the Ship is definitively and permanently registered in the name of the Borrower under the
Liberian flag;
	 
	(b)	 	the Ship is in the absolute and unencumbered ownership of the Borrower save as contemplated
by the Finance Documents to which the Borrower is a party;

48

 

	(c)	 	the Ship maintains the highest class available for vessels of the same type, age and
characteristics as the Ship with a classification society, approved by the Lender, which is a
member of IACS, free of any outstanding or overdue recommendations and conditions of such
classification society affecting the Ship’s class (other than outstanding recommendations and
conditions notified to the lender in the writing prior to the date of this Agreement;
	 
	(d)	 	the Mortgage has been duly registered against the Ship as a valid first preferred ship
mortgage in accordance with the laws of Liberia; and
	 
	(e)	 	the Ship is insured in accordance with the provisions of this Agreement and all requirements
therein in respect of insurances have been complied with.
	 
	13	 	Documents establishing that the Ship is or will be managed by the Approved Manager on terms
acceptable to the Lender, together with:
	 
	(a)	 	the Approved Manager’s Undertaking in relation to the Ship duly signed by the Approved
Manager;
	 
	(b)	 	copies of the Approved Manager’s document of compliance (DOC) and the safety management
certificate (SMC) in respect of the Ship referred to in paragraph (a) of the definition of the
ISM Code Documentation certified as true and in effect by the Borrower and the Approved
Manager; and
	 
	(c)	 	a copy of the International Ship Security Certificate in respect of the Ship certified as
true and in effect by the Borrower and the Approved Manager.
	 
	14	 	Copies of the Approved Charter and the MOA and any addendum, novation agreement or amendment
in respect thereof.
	 
	15	 	Favourable opinions from an independent insurance consultant acceptable to the Lender on such
matters relating to the insurances for the Ship as the Lender may require.
	 
	16	 	Favourable legal opinions from lawyers appointed by the Lender on such matters concerning the
laws of Liberia and such other relevant jurisdictions as the Lender may require.

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 Borrower.

49

 

SCHEDULE 2

MANDATORY COST FORMULA

	1	 	The Mandatory Cost is an addition to the interest rate to compensate the Lender for the cost
of compliance with (a) the requirements of the Financial Services Authority (or any other
authority which replaces all or any of its functions) or (b) the requirements of the European
Central Bank.
	 
	2	 	On the first day of each Interest Period (or as soon as possible thereafter) the Lender shall
calculate, as a percentage rate, a rate (the “Additional Cost Rate”) for the Lender, in
accordance with the paragraphs set out below. The Mandatory Cost will be calculated by the
Lender and will be expressed as a percentage rate per annum.
	 
	3	 	The Additional Cost Rate for the Lender lending from a lending office in a Participating
Member State will be the percentage certified by the Lender to be its reasonable determination
of the cost of complying with the minimum reserve requirements of the European Central Bank in
respect of loans made from that lending office.
	 
	4	 	The Additional Cost Rate for the Lender lending from a lending office in the United Kingdom
will be calculated by the Lender as follows:

	 	 	 	 	 

	 

	 	E x 0.01
 

300
	 	per cent. per annum

	 	 	 	Where:
	 
	 	E 	 	is designed to compensate the Lender for amounts payable under the Fees Rules
and is calculated by the Lender as being the average of the most recent rates of charge
supplied to the Lender pursuant to paragraph 6 below and expressed in pounds per
£1,000,000.

	5	 	For the purposes of this Schedule:
	 
	(a)	 	“Special Deposits” has the meaning given to it from time to time under or pursuant to the
Bank of England Act 1998 or (as may be appropriate) by the Bank of England;
	 
	(b)	 	“Fees Rules” means the rules on periodic fees contained in the FSA Supervision Manual or
such other law or regulation as may be in force from time to time in respect of the payment of
fees for the acceptance of deposits;
	 
	(a)	 	“Fee Tariffs” means the fee tariffs specified in the Fees Rules under the activity group A.1
Deposit acceptors (ignoring any minimum fee or zero rated fee required pursuant to the Fees
Rules but taking into account any applicable discount rate);
	 
	(b)	 	“Participating Member State” means any member state of the European Union that adopts or has
adopted the euro as its lawful currency in accordance with legislation of the European Union
relating to European Monetary Union; and

50

 

	(c)	 	“Tariff Base” has the meaning given to it in, and will be calculated in accordance with, the
Fees Rules.
	 
	6	 	If the Lender is lending from a lending office in the United Kingdom shall, as soon as
practicable after publication by the Financial Services Authority, calculate, the rate of
charge payable by the Lender to the Financial Services Authority pursuant to the Fees Rules in
respect of the relevant financial year of the Financial Services Authority (calculated for
this purpose by the Lender as being the average of the Fee Tariffs applicable to the Lender
for that financial year) and expressed in pounds per £1,000,000 of the Tariff Base of the
Lender.
	 
	7	 	The Lender shall confirm the jurisdiction of its lending office on or prior to the date on
which it makes available the Loan:
	 
	8	 	Unless a Lender notifies to the contrary, the Lender’s obligations in relation to cash ratio
deposits and Special Deposits are the same as those of a typical bank from its jurisdiction of
incorporation with a lending office in the same jurisdiction as its lending office.
	 
	9	 	Any determination by the Lender pursuant to this Schedule in relation to a formula, the
Mandatory Cost, an Additional Cost Rate or any amount payable to the Lender shall, in the
absence of manifest error, be conclusive and binding on all parties.

The Lender may from time to time, after consultation with the Borrower determine and notify to all
parties any amendments which are required to be made to this Schedule in order to comply with any
change in law, regulation or any requirements from time to time imposed by the Financial Services
Authority or the European Central Bank (or, in any case, any other authority which replaces all or
any of its functions) and any such determination shall, in the absence of manifest error, be
conclusive and binding on the Borrower.

51

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